Zero-rated GST for financial services provider

Section 11A(1)(q) of the Goods and Services Tax Act 1985 explains a supply of financial services is zero-rated:

Section 11A(1)(q) of GST Act 1985 allows registered suppliers of financial services to elect their business to business supplies to be zero-rated, rather than exempt income. Thus, they can claim input tax deduction for the goods and services they buy. This will provide relief from over-taxation for taxpayers who provide financial services and aims to encourage financial services providers to outsource essential activities to improve the efficiency of resources.
The rule is explained as below:

• The recipient must be a registered person for GST for the rule to apply. If the client is not registered for GST, the supply will be considered as exempt income for you.
• The recipient makes or is reasonably expected to make at least 75% taxable supplies or more of their total supplies (excludes zero-rated business-to-business financial supplies). This means that you must look at your client’s taxable supply to determine whether to treat the transaction as exempt or zero rated. If your client’s taxable supply is 75% or more, this transaction will be zero rated for GST purposes.

Please seek professional advice to find out if you qualify under this rule.

Disclaimer: The following answer necessarily sets out general principles only. The facts of particular cases always need to be considered carefully, and it may be necessary to obtain advice from a tax expert.

{proforms 1}