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A New Tax System (Goods and Services Tax) Act 1999

Chapter 4 - The special rules  

Part 4-2 - Special rules mainly about supplies and acquisitions  

Note:

The special rules in this Part mainly modify the operation of Part 2-2, but they may affect other Parts of Chapter 2 in minor ways.

Division 111 - Reimbursement of employees etc.  

111-5  Creditable acquisitions relating to reimbursements  

(1)  

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If one or more of the following applies:


(a) you reimburse an employee or agent for an expense he or she incurs that is related directly to his or her activities as your employee or agent;
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(ab) you reimburse an employee (whether or not you are the employee's employer) for an expense that the employee or the employee's *associate incurs, and the reimbursement constitutes an *expense payment benefit;
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(ac) you reimburse an associate of an employee (whether or not you are the employee's employer) for an expense that the associate or employee incurs, and the reimbursement constitutes an expense payment benefit;
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(b) you are a *company and you reimburse an *officer for an expense he or she incurs that is related directly to his or her activities as your officer;
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(c) you are a *partnership and you reimburse a partner for an expense he or she incurs that is related directly to his or her activities as a partner in the partnership;

the reimbursement is treated as *consideration for an acquisition that you make from the employee, associate, agent, officer or partner.

Note:

This section also applies if you reimburse the recipient of certain withholding payments: see section 111-20.

(2)  

The fact that the supply to you is not a *taxable supply does not stop the acquisition being a *creditable acquisition.

(3)  

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However, the acquisition is not a *creditable acquisition:


(a) to the extent (if any) that:

(i) the employee, *associate, agent, *officer or partner is entitled to an input tax credit for acquiring the thing acquired in incurring the expense; or

(ii) the acquisition would not, because of Division 69, be a creditable acquisition if you made it; or
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(b) unless the supply of the thing acquired, by the employee, associate, agent, officer or partner in incurring the expense, was a taxable supply; or
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(c) if you would, because of Division 71, not have been entitled to an input tax credit if you had made the acquisition that the employee, associate, agent, officer or partner made.
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(3AA)  

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In working out the extent to which a person is entitled to an input tax credit for the purposes of paragraph (3)(a), disregard sections 131-40 and 131-50 (which are about amounts of input tax credits under the annual apportionment rules).

(3A)  

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If you are a *partnership, this section does not apply to your reimbursement of a partner for an expense he or she incurs if, even without this Division applying, you are entitled to an input tax credit arising from the incurring of the expense.

(4)  

This section has effect despite section 11-5 (which is about what is a creditable acquisition).

 



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