On 10 August 2022 the ATO opened a consultation on a draft update to Taxation Ruling No. GSTR 2002/2DC1, on the GST treatment of financial supplies and related activities.
The draft update to the ruling incorporates changes in the GST law such as the provisions relating to cross-border supplies. There are new references to the public guidance released on financial supplies, and some modernisation of parts of the ruling.
The draft updated ruling aims to clarify what constitutes a financial supply and what types of acquisitions entitle taxpayers to a reduced input tax credit. Also clarified in the draft ruling are the financial acquisitions threshold; the application of reduced input tax credits; and the application of reverse charges on offshore intangible supplies.
The deadline for submitting comments is 23 September 2022.
Digital currency
The text has also been updated to include references to digital currency. The guidance clarifies that the definition of a supply excludes a supply of digital currency unless the digital currency is provided as consideration for a supply that is a supply of money or digital currency. Example 14 now illustrates the treatment of digital currency. Also, the definition of digital currency as set out in Section 195-1 of the legislation has been included in Schedule 2 of the draft ruling.
Buy-now pay-later
A new example 2A has been added on the treatment of buy-now pay-later transactions, applying the ATO’s approach to interest free loans.
Schedule 2 has been updated to show situations when certain foreign currency-denominated products and overseas payment products are GST-free.
