• 1.21. When will an entitlement to an input tax credit arise for a purchaser in relation to the acquisition of a chattel under a chattel mortgage?

    For source of ATO view, refer to paragraphs 14, 18, 32 and 35 of GSTR 2000/29External Link - Goods and services tax: attributing GST payable, input tax credits and adjustments and particular attribution rules made under section 29-25

    Where the purchaser accounts for GST on a non-cash basis and the chattel purchased is a creditable acquisition, the purchaser is entitled to the entire input tax credit in the tax period in which the invoice is received or any payment is made, whichever is the earlier. This is similar to that under a hire purchase agreement.

    If the purchaser accounts for GST on a cash basis and the chattel purchased is a creditable acquisition, the purchaser is entitled to the entire input tax credit in the tax period in which the purchaser applies the borrowed funds to make full payment of the chattel at the time of acquisition. For an explanation of the GST treatment and entitlement to an input tax credit for an acquisition made under a hire purchase agreement by a recipient accounting on a cash basis, please refer to question 1.3 of the Frequently Asked Questions on Hire purchase agreements.

    The purchaser must hold a tax invoice at the time of lodging its BAS to claim an input tax credit in a tax period, irrespective of whether the purchaser accounts for GST on a cash or non-cash basis.

      Last modified: 24 Jun 2015QC 16359