• 7.a.12. Can an employer claim the GST included in CPD fees paid on behalf of an employee as an input tax credit?

    Non-interpretative – straight application of the law.

    If these activities are performed in carrying on your enterprise, then an input tax credit may be available if the other conditions in section 11-20 are satisfied. Section 11-20 provides that you are entitled to an input tax credit for any *creditable acquisition that you make.

    Pursuant to section 11-5, you make a *creditable acquisition when:

    1. you acquire anything solely or partly for a *creditable purpose, and
    2. the supply of the thing to you is a *taxable supply, and
    3. you provide, or are liable to provide, *consideration for the supply, and
    4. you are *registered, or *required to be registered.

    *Creditable purpose is in turn defined in section 11-15(1) which provide you acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. You do not acquire for a creditable purpose to the extent that the thing acquired is used for producing input tax supplies (section 11-15(2)(a)) or it is used for a private or domestic nature (section 11-15(2)(b)).

    The amount of the input tax credit is reduced if it is only partly creditable (section 11-25). It will be partly creditable where it is only partly for a creditable purpose or you provide, or are liable to provide, only part of the consideration for the supply (section 11-30).

    If the employee originally paid and is subsequently reimbursed by the employer, then the employer may be entitled to an input tax credit for the reimbursement. Creditable acquisitions relating to reimbursements are covered in Division 111 and require that the reimbursement be 'directly related to activities' as an employee. The reimbursement will be treated as consideration. However, it will not be a creditable acquisition if the person receiving the reimbursement is entitled to an input tax credit or it was not a taxable supply to that person. The amount of the input tax credit is dealt with in section 111-10.

      Last modified: 16 Oct 2013QC 16330