Are Finance Referral Fees Subject to GST in Australia?

Often a referral service supplied by a GST-registered business for consideration can fall within the general taxable-supply rules, but the GST outcome depends on the actual arrangement and any relevant exceptions. A professional firm should confirm the treatment of its referral agreement rather than assuming every commission is automatically GST-free or GST-inclusive.

Quick answer: Often a referral service supplied by a GST-registered business for consideration can fall within the general taxable-supply rules, but the GST outcome depends on the actual arrangement and any relevant exceptions. A professional firm should confirm the treatment of its referral agreement rather than assuming every commission is automatically GST-free or GST-inclusive.

This is a tax-characterisation question, not something to guess from the word "commission."

Start with the general taxable-supply test

Section 9-5 of the GST Act looks at whether:

  • there is a supply for consideration;
  • the supply is made in the course or furtherance of an enterprise;
  • it is connected with Australia; and
  • the supplier is registered or required to be registered.

A supply can still be outside GST or treated differently where a specific exception applies.

A referral can itself be a service

ATO material includes examples where services that bring customers to another business are treated as supplies for consideration. That does not mean every referral arrangement has identical GST treatment, but it shows why the payment should not simply be ignored for GST purposes.

Questions to settle before the first payment

A professional firm should clarify:

  • whether the stated referral amount is GST-inclusive or plus GST;
  • whether the referrer is registered for GST;
  • what tax invoice or recipient-created tax invoice process is being used;
  • when the commission is treated as earned;
  • how adjustments or clawbacks are handled.

Keep GST separate from credit-law disclosure

Whether GST applies to the payment is a tax question.

Whether the referral fee needs to be disclosed to the client under credit or professional-conduct rules is a different question.

A good partner agreement deals with both rather than mixing them together.

Thinking about adding finance referrals to your practice? GPS Finance works with professional referrers across consumer, vehicle, asset, business and commercial finance. Partner remuneration can be available on eligible settled referrals under an agreed arrangement; the structure varies by product and relationship. [See how the GPS Finance partner model works](https://gpsfinance.com.au/partners?content_origin=finance-referral-fees-gst&partner_type=professional&promo=partner_article_cta).

Related referral guides

Sources and verification

KK Neelamraju — Founder, GPS Finance Group

KK is a finance and credit professional with more than 20 years of lending and credit experience.

General information only. Referral, licensing, professional-conduct, tax and disclosure obligations depend on the activity, profession, client and arrangement. This is not legal, tax or accounting advice. Check the requirements that apply to your practice before relying on a referral exemption or accepting remuneration.

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