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Re: Claiming GST on Pass through expense

Newbie

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Replies 1

Dear all, 

 

My parent company is in Canada, they arrange for all our insurance and pay for it then they will pass through the whole invoice amount (e.g. $100 +$10 GST = $110) through intercompany. The insurance company is in Australia for insuring our Australian business, the invoice obviously therefore attract GST, but the invoice is addressed to our Parent copmany. When the whole invoice amount is passed through, can I claim this GST? 

 

Thank you

Nancy

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Community Support

Replies 0

Hello @nchen

 

If I understand you correctly, it sounds like the Canadian company is paying the invoice and then passing on (on-charging) the invoice to your Australian company?

 

The Australian company can only claim GST if it the parent company is registered for GST and included GST when on-charging.

 

On-charging of invoices is a taxable sale and needs to be treated as a separate transaction to the original invoice.

 

It can be a bit confusing so I'll try to make it a simple as I can.

 

 

Transaction 1: Insurance company invoices parent company

  • Invoice is $110 ($100 + $10 GST)  >  Parent company can claim $10 GST credit (if registered for GST)

Transaction 2: Parent company on-charging to Australian company

  • If parent is registered for GST: Invoice will be $121 ($110 + $11 GST)  >  Australian company can claim $11 GST
  • If parent isn't registered for GST: Invoice will be $110  >  Australian company can't claim any GST because parent can't charge GST

 

Hope this makes sense.

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hello @nchen

 

If I understand you correctly, it sounds like the Canadian company is paying the invoice and then passing on (on-charging) the invoice to your Australian company?

 

The Australian company can only claim GST if it the parent company is registered for GST and included GST when on-charging.

 

On-charging of invoices is a taxable sale and needs to be treated as a separate transaction to the original invoice.

 

It can be a bit confusing so I'll try to make it a simple as I can.

 

 

Transaction 1: Insurance company invoices parent company

  • Invoice is $110 ($100 + $10 GST)  >  Parent company can claim $10 GST credit (if registered for GST)

Transaction 2: Parent company on-charging to Australian company

  • If parent is registered for GST: Invoice will be $121 ($110 + $11 GST)  >  Australian company can claim $11 GST
  • If parent isn't registered for GST: Invoice will be $110  >  Australian company can't claim any GST because parent can't charge GST

 

Hope this makes sense.