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GST on reduced credit acquisitions

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As per ATO, the following are the common reduced credit acquisitions:

  1. Investment management functions
  2. Administrative functions

It is also stated that investment management functions include establishment of a financial plan or investment strategy and its ongoing implementation and execution. Since adviser fees charged to SMSF are mostly for strategic advice on investment diversification and risk management, I think it is correct to treat them as reduced credit acquisitions.

 

Question: Would other adviser fees such as withdrawal and recontribution strategy and pension establishments be treated as reduced credit acquisitions as well? Please note these were actually implemented. 

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Devotee Registered Tax Practitioner

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Question: Would other adviser fees such as withdrawal and recontribution strategy and pension establishments be treated as reduced credit acquisitions as well? 

 

Depends what is shown on the invoice  -  looks like RCTI is for implementation of the advice, rather than the advice itself.

Worth looking at GSTR 2004/1 in detail.

 

From ATO:

GSTR 2004/1 - Goods and services tax: Reduced tax acquisitions states that management involves more than just providing advice for you to act on. This means that obtaining financial advice by itself is not a reduced credit acquisition.

Investment management services include, but are not limited to:

  • establishing a financial plan or investment strategy
  • ongoing implementation, execution, or refining of that plan or strategy
  • ongoing implementation or execution of a given investment mandate.

 

Administrative functions

The following administrative functions are reduced credit acquisitions if they relate to investment funds, including superannuation schemes:

  • maintaining member, employer and trustee records and associated accounting
  • processing applications, contributions, benefits and distributions
  • ensuring compliance with industry regulatory requirements (excluding taxation and auditing services).
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Best answer

Devotee Registered Tax Practitioner

Replies 3

Question: Would other adviser fees such as withdrawal and recontribution strategy and pension establishments be treated as reduced credit acquisitions as well? 

 

Depends what is shown on the invoice  -  looks like RCTI is for implementation of the advice, rather than the advice itself.

Worth looking at GSTR 2004/1 in detail.

 

From ATO:

GSTR 2004/1 - Goods and services tax: Reduced tax acquisitions states that management involves more than just providing advice for you to act on. This means that obtaining financial advice by itself is not a reduced credit acquisition.

Investment management services include, but are not limited to:

  • establishing a financial plan or investment strategy
  • ongoing implementation, execution, or refining of that plan or strategy
  • ongoing implementation or execution of a given investment mandate.

 

Administrative functions

The following administrative functions are reduced credit acquisitions if they relate to investment funds, including superannuation schemes:

  • maintaining member, employer and trustee records and associated accounting
  • processing applications, contributions, benefits and distributions
  • ensuring compliance with industry regulatory requirements (excluding taxation and auditing services).

Initiate

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Thanks @Bruce4Tax 

 

For example, the narration on the invoice includes both providing advice and subsequent implementation?

Is it safe to have the full amount recognised as reduced credit acquisition?

Devotee Registered Tax Practitioner

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If the 2 items are connected, as it appears, the it is arguable that RITC is available to the whole amount.

 

You just have to be able to fit it into the definitions in GSTR 2004/1.

Initiate

Replies 0

Awesome!!!!

Thanks a lot @Bruce4Tax 

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