20C Goods and services tax incurred in making certain supplies of financial services

Subject to this section, a registered person who has made an election under section 20F and who in respect of a taxable period supplies financial services to another supplier of financial services (called in this section a direct supplier) may make for each direct supplier a deduction under section 20(3)(h) of an amount given by the following formula:

a × (b ÷ c) × (d ÷ e)

where—

a

is the total amount in respect of the taxable period that the registered person—

(a)

would not be able to deduct under section 20(3) in the absence of this section; and

(b)

would be able to deduct under section 20(3), other than under section 20(3)(h), if all supplies of financial services by the registered person were taxable supplies

b

is the total value of exempt supplies of financial services by the registered person to the direct supplier in respect of the taxable period

c

is the total value of exempt supplies of financial services by the registered person in respect of the taxable period

d

is the total value of taxable supplies by the direct supplier in respect of the taxable period, determined under section 20D

e

is the total value of supplies by the direct supplier in respect of the taxable period, determined under section 20D.

Section 20C: inserted, on 1 January 2005, by section 155 of the Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 (2003 No 122).

Section 20C formula item a: substituted, on 1 January 2005, by section 151 of the Taxation (Venture Capital and Miscellaneous Provisions) Act 2004 (2004 No 111).

Section 20C formula item c: substituted (with effect on 1 January 2005), on 7 September 2010 (applying for taxable periods beginning on or after 1 January 2005), by section 192(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).