20HGoods and services tax incurred in making financial services for raising funds

1. A registered person who makes supplies of financial services referred to in paragraph (a), and is, or intends to be, principally making supplies that would be taxable supplies in the absence of the supplying of the financial services, has a deduction under section 20(3)(hd) of input tax for the supplies that are used in making the supplies of the financial services, if—

2. the supplies of the financial services (the funding support services) are made in the course of raising funds that are intended to be used in a taxable activity, or to be a replacement for funds used in a taxable activity, of the registered person or of a person (the group company) in the same group of companies under the Income Tax Act 2007; and
3. the funding support services are not referred to in section 11A(1)(q) and (r); and
4. the supplies used in making the supplies of funding support services do not give rise to a deduction under section 20(3) for the registered person or the group company in the absence of this section; and
5. the funding support services are—
   1. the issue or allotment of an interest or right (a funding security) that is a debt security, participatory security, equity security, or a cryptocurrency with similar features and function:
   2. the renewal of a funding security:
   3. the payment of an amount of interest, principal, or dividend for a funding security:
   4. the provision or variation of a guarantee of the performance of obligations in the issue, allotment, or renewal of a funding security; and
6. the funding support services fail to raise the funds or do raise funds that are used, or that replace funds that are used, by the registered person or the group company for expenditure in the taxable activity; and
7. the supplies used in making the supplies of funding support services would give rise to a deduction under section 20(3) if used in the taxable activity in which the funds are intended to be used.

8. If a registered person makes supplies of financial services in the course of raising funds that are or would have been used by the registered person or a group company in both a taxable activity and an activity that is not a taxable activity (the funded activities), the deduction for input tax under subsection (1) is limited to the input tax from a fraction of the total expenditure incurred in supplying the financial services, where the fraction equals the fraction of the total value of supplies made in the course or furtherance of the funded activities that consists of taxable supplies.

9. A non-resident person who is registered under section 54B does not have a deduction of input tax under subsection (1).