Tax Bites

Sale of shares to non-resident may be GST-free rather than input taxed

15th July 2015

  • Generally when shares in an Australian company are sold by an Australian entity, most people assume that the sale of shares is input taxed for GST purposes.
  • While this is correct for sales to Australian residents, it is not the case for sales to non-residents that are not present in Australia.
  • In broad terms, a sale of shares in Australian company by an Australian entity to a non-resident that is not present in Australia should be GST-free (as opposed to input taxed).
  • The impact of this is the GST input tax credits in relation to associated acquisitions (such as investment bank services, accounting and legal services etc) may be able to be claimed in full even if the seller exceeds the Financial Acquisitions Threshold (subject to meeting the other usual requirements for a GST input tax credit to be available).
  • Given that the Financial Acquisitions Threshold can be breached where the amount of credits from financial acquisitions exceeds 10% of total input tax credits in any 12 month period (as a separate test to the $150,000 test), this is not just a Big End of Town issue.
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Tax Bites are general in nature and are not a substitute for specific advice. They are the opinion of Tax Advisory Specialists, and the ATO or the Courts may take a different view. They are not updated for changes in the law or the interpretation of the law since publication.


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