The Federal Court held that acquisitions in the form of commissions paid to a third-party with respect to a distribution and administration agreement related wholly to input supplies of life insurance policies in Australia subject to goods and services tax (GST) (rather than GST-free “acquisition-supplies” of reinsurance to a foreign parent company) and thus were not entitled to input tax credits, but that overhead costs related indifferently to all enterprise activities and thus were entitled to input tax credits to the extent apportioned to GST-free supplies. The court also found that the taxpayer’s method of apportionment for that purpose was fair and reasonable.
Source: kpmg.com
