GST issues registers
Financial services - questions and answersSecurities transactions
(a) added, (u) updated, (w) withdrawn
| Issue no | Issue | Date |
|---|---|---|
| 4.1 | What are the GST implications when you buy or sell shares? | 1 April 2019(u) |
| 4.2 | Is brokerage on share transactions subject to GST? | 1 April 2019(u) |
| 4.3 | Is stamp duty on the purchase or sale of shares subject to GST? | 7 September 2012(u) |
| 4.4 | If I buy or sell shares in the course or furtherance of an enterprise I carry on, will I be entitled to input tax credits for GST paid on brokerage? | 1 April 2019(u) |
| 4.5 | If I buy or sell shares, but not in the course or furtherance of an enterprise I carry on: (a) will I be entitled to input tax credits for GST on brokerage? (b) if I am not entitled to input tax credits, is the GST paid recognised as a cost for capital gains tax purposes? | 1 January 2001 |
| 4.6 | If I carry on an enterprise as a share trader and have a turnover of more than $75,000: (a) am I required to register for GST purposes? (b) should I register for an Australian business number (ABN)? | 1 January 2001 |
| 4.7 | Are dividends received from shares subject to GST? | 1 January 2001 |
4.1. What are the GST implications when you buy or sell shares?
Non-interpretative - other references (see GSTR 2002/2 Goods and services tax: GST treatment of financial supplies and related supplies and acquisitions)
GST is not applicable when you buy or sell shares in the course or furtherance of an enterprise that you carry on, because the provision, acquisition or disposal of an interest in shares is a financial supply under item 10 in the table in subsection 40-5.09(3) of the GST Regulations.
Where you are not carrying on an enterprise, GST is not applicable to your buying or selling of shares.
4.2. Is brokerage on share transactions subject to GST?
Non-interpretative - straight application of the law
Yes. Broking service is a taxable supply. It is listed as 'a supply that is not a financial supply' at item 11 in the table in section 40-5.12 of the GST Regulations.
Brokerage on the supply of foreign shares traded on an overseas exchange will be GST-free under item 4 in the table in subsection 38-190(1).
4.3. Is stamp duty on the purchase or sale of shares subject to GST?
Non-interpretative - straight application of the law
The Treasurer has excluded stamp duty from GST by a determination.
4.4. If I buy or sell shares in the course or furtherance of an enterprise I carry on, will I be entitled to input tax credits for GST paid on brokerage?
For source of ATO view, refer to:
- •
- Paragraphs 12 and 13 of GSTR 2003/9 Goods and Services Tax: financial acquisitions threshold
- •
- Paragraph 285 of GSTR 2004/1 Goods and services tax: reduced credit acquisitions.
If you are registered for GST and buy or sell shares in the course or furtherance of an enterprise you carry on, you make financial supplies and you are not entitled to input tax credits.
However, if you do not exceed the financial acquisitions threshold (explained at question 7) you may be entitled to a full input tax credit.
If you exceed the financial acquisition threshold, you may still be entitled to reduced input tax credits on brokerage, as it is a reduced credit acquisition under item 9 in the table in subsection 70-5.02(2) of the GST Regulations. The amount of reduced input tax credit is 75% of the GST included in the brokerage fees (section 70-5.03 of the GST Regulations).
4.5. If I buy or sell shares, but not in the course or furtherance of an enterprise I carry on:
Non-interpretative - straight application of the law.
- a.
- No, you will not be entitled to input tax credits or reduced input taxed credits for GST paid on brokerage because you have not bought or sold the shares in the course or furtherance of an enterprise.
- b.
- Yes, the cost base of the shares will include the GST you paid on brokerage.
4.6. If I carry on an enterprise as a share trader and have a turnover of more than $75,000:
Non-interpretative - straight application of the law
- a.
- You are required to register for GST, if you carry on an enterprise and your GST turnover, or your projected GST turnover, is $75,000 or more. However, input tax supplies are excluded when working out the GST turnover. Accordingly, you may not be required to register for GST if you carry on an enterprise as a share trader and the turnover exceeds $75,000.
- b.
- When you register for GST you will be allocated an ABN. If you choose not to register for GST, it may still be in your interest to apply for an ABN because the ABN will be used as a means of identification when interacting with Commonwealth and state government departments and agencies. However, it will not replace the current tax file number.
4.7. Are dividends received from shares subject to GST?
Non-interpretative - straight application of the law
The receipt of a dividend is not a supply. GST is not applicable.
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