• 1.3. When will entitlement to an input tax credit arise for the recipient of goods in a hire purchase agreement?

    For source of ATO view, refer to paragraphs 211 and 212 of GSTR 2000/29 Goods and services tax: attributing GST payable, input tax credits and adjustments and particular attribution rules made under section 29-25.

    For hire purchase agreements entered into before 1 July 2012:

    • if the recipient accounts for GST on a cash basis and the item purchased is a creditable acquisition, the recipient is entitled to an input tax credit on the principal component, in a tax period, to the extent of payment made
    • where the recipient accounts for GST on a non-cash basis and the item purchased is a creditable acquisition, the recipient is entitled to the entire input tax credit on the principal, in the tax period in which the invoice is received or in which any payment is made, whichever is earlier.

    For hire purchase agreements entered into on or after 1 July 2012:

    • if the recipient accounts on a cash basis the recipient is entitled to claim input tax credits on a creditable acquisition for both the principal and credit component as if they are accounting for GST on a non cash basis
    • where the recipient accounts for GST on a non-cash basis and the item purchased is a creditable acquisition, the recipient is entitled to the entire input tax credit on both the principal and the credit component in the tax period in which the invoice is received or in which any payment is made, whichever is earlier.

    The recipient is required to hold a tax invoice in order to claim input tax credits, irrespective of whether the recipient accounts on a cash basis or non-cash basis.

      Last modified: 31 Oct 2017QC 16359