Financial supplies after 20 years

This article will review the workings of GST in Australia in relation to financial supplies over the past 20 years, focusing in particular on the issues that have arisen before the courts. In this context the article first considers the workings of the rules denying input credits to makers of financial supplies, where it is noted that the legislative provisions have been interpreted expansively so as to determine creditability based on direct or indirect attribution to taxable or input taxed supplies. The article then considers the rules for apportioning inputs between creditable and non-creditable purposes and notes a debate as to the extent to which particular expenses need to be directly related to taxable or input taxed activities in order to be included in a general apportionment formula. The article also considers the proper approach to how supplies should be characterised for GST purposes and the extent to which this relies on a view that the GST is 'a practical business tax'. The article concludes with observations on some of the challenges posed by technological change, and in particular advances in artificial intelligence, to the workings of GST in the financial sector and the current understanding of the concepts in the definition of financial supplies.