GST input tax credits
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If the acquisition or importation of a depreciating asset constitutes a creditable acquisition or a creditable importation, the cost of the asset is reduced by any input tax credit you are, or become, entitled to for the acquisition or importation. If you become entitled to the input tax credit in an income year after the one in which the asset's start time occurred, its opening adjustable value is also reduced by the amount of the input tax credit.
If the cost of a depreciating asset is taken to be its market value (such as for assets acquired under a private or domestic arrangement), the market value is reduced by any input tax credit to which you would be entitled had the acquisition been solely for a creditable purpose.
Similarly, any input tax credit you are entitled to claim in relation to the second element of a depreciating asset's cost reduces the cost of the asset. Its opening adjustable value is also reduced if you become entitled to the input tax credit in an income year after the one in which the asset's start time occurred.
Certain adjustments under the GST legislation reduce or increase the cost and, in some cases, the opening adjustable value of the asset. For example, these can commonly arise in the event of a change in price or because of the application of volume discounts. Other adjustments are treated as an outright deduction or income.
Last modified: 27 Aug 2007QC 27892
In this guide, when the words 'ignoring any GST impact' are used it should be noted that if you are not entitled to claim an input tax credit for GST for a depreciating asset you hold, the cost of the depreciating asset includes any GST paid.
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