GST issues registers

Financial services - questions and answers

Leases

(a) added, (u) updated, (w) withdrawn

9.1. Are motor vehicle or plant and equipment leases subject to GST?

Non-interpretative - straight application of the law

Generally leases - whether they are finance, operating or novated leases - will be subject to GST.

9.2. What happens if my lease spans the period before and after the GST implementation date of 1 July 2000?

Non-interpretative - other references:

•

GSTR 2000/7 Goods and Services Tax: transitional arrangements - supplies, including supplies of rights, made before 1 July 2000 and the extent to which such supplies are taken to be made on or after 1 July 2000

•

GSTR 2000/16 Goods and Services Tax: transitional arrangements - GST-free supplies under existing agreements.

Where a lease spans 1 July 2000, the lease will be subject to GST to the extent that the supply occurs after 30 June 2000. However, the lease may be GST-free under section 13 of the Transition Act if the lease that has been entered into is a non-reviewable agreement.

9.3. When will the GST liability and input tax credit entitlement arise if I am a lessor?

Non-interpretative - other references (see GSTR 2000/29 Goods and services tax: attributing GST payable, input tax credits and adjustments and particular attribution rules made under section 29-25)

If the lessor accounts for GST on a cash basis, GST liability is attributable to the tax periods in which payments for the supply are received.

The attribution rules for supplies of goods under lease agreements are provided by Division 156 of the Act. Section 156-5 of the Act has the effect of treating each progressive or periodic component as a separate supply. That is, the general attribution rules in Division 29 of the Act apply to each component of the supply.

Therefore, lessors who account for GST on a non-cash basis will be liable for GST for the supply in the tax period in which:

•

payment is received by the lessor, or

•

when a lease payment is due and payable by the lessee as outlined in the payment schedule contained in the lease agreement document, if this is earlier.

9.4. When will the input tax credit entitlement arise if I am a lessee?

Non-interpretative - other references (see GSTR 2000/29 Goods and services tax: attributing GST payable, input tax credits and adjustments and particular attribution rules made under section 29-25)

Generally, entitlement to input tax credits for lessees will arise in the tax period in which the lease payment is due and payable as outlined in the payment schedule contained in the lease agreement document. However, if the lessee accounts for GST on the cash basis, the lessee will be entitled to an input tax credit when lease payments are made.

9.5. What are the tax invoice requirements for leases?

Non-interpretative - other references (see GSTR 2013/1 Goods and services tax: tax invoices) provides guidelines on tax invoice requirements. A single document can be a tax invoice for a supply if it satisfies the requirements of subsection 29-70(1) of the GST Act and it shows the price of the supply. A lease agreement document may be used as a tax invoice to the extent that the requirements of subsection 29-70(1) are satisfied.

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).