A superannuation fund must register for GST if its turnover is greater than $75,000. Funds with a lower annual turnover are not required to register for GST but may register voluntarily if they wish.
The advantage in registering, when it is not compulsory, is that the fund could obtain a refund of any reduced input tax credits (RITCs). RITCs are generally 75% of the GST on certain reduced credit acquisitions.
In deciding whether to register, you should consider:
- Any increases in time or costs for record keeping and reporting
- The fact that GST applies to taxable sales and you could claim GST credits for creditable purchases.
- Whether you can claim reduced GST credits on your reduced credit acquisitions.
In general, a fund which is registered for GST can claim an input tax credit for 100% of the GST paid on items purchased in the course of carrying on its enterprise (known as creditable acquisitions), provided the items purchased are not used to make input taxed supplies.
There is one exception to the rule that input tax credits’ cannot be claimed on acquisitions attributable to input taxed supplies. A partial input tax credit, known as a Reduced Input Tax Credit (RITC) is available where the acquisition is specifically listed as a reduced credit acquisition.
Also, funds which make financial supplies below a certain threshold may be permitted to recover all of the input tax credits despite the making of financial supplies.
For more information on any of the above information or on how to properly complete your Superannuation Fund’s Business activity statement please do not hesitate to contact our office.
Kyla Dalton – Accountant