The Government has decided that the supply of an interest in, or under, a barter trade exchange scheme (barter scheme) will not be treated as an input taxed financial supply for GST purposes, the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, announced today.
“The Government is introducing this measure to provide a GST treatment that reflects the true character of barter schemes,” Senator Coonan said.
Under the current law, barter schemes are treated in the same way as managed investment schemes for GST purposes. Consequently, a supply of an interest in, or under, a barter scheme is treated as an input taxed financial supply.
However, the actual operation of barter schemes is fundamentally different from that of general managed investment schemes. Barter schemes do not offer an investment product, nor do they access membership funds for the purposes of investment at-risk.
The acquisition of an interest in a barter scheme only provides the member participation rights in the scheme, including rights over trading in goods and services. This does not involve rights to an income stream which is characteristic of interests in more traditional types of managed investment schemes.
In light of this, the Government will amend the GST Regulations to remove the classification of barter schemes as managed investment schemes thereby ensuring the supply of an interest under a barter scheme is no longer treated as an input taxed financial supply.
Consequently, where the supply is a taxable supply, GST will be required to be remitted on the supply of the interest and input tax credits would be available for the acquisition of the interest. Further, barter scheme suppliers will be entitled to claim input tax credits for acquisitions that relate to making the supply of the interest in the scheme.
Because this measure affects the GST revenue base, it is subject to the unanimous agreement of the states and territories who receive the GST revenue.
This measure will take effect from the date of gazettal of the regulations.