ATO Interpretative Decision

ATO ID 2001/680 (Withdrawn)

Goods and Services Tax

• The ATO view for this issue is covered in Goods and Services Tax Ruling GSTR 2003/13 (particularly paragraphs 27-30).
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a partnership, entitled to an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), for an acquisition that is made by a partner?

Decision

Yes, the entity is entitled to an input tax credit under section 11-20 of the GST Act for an acquisition that is made by a partner.

Facts

The entity is a partnership. A partner, in their capacity as a partner, makes an acquisition on behalf of the entity. This acquisition is for consideration and relates to the enterprise that the entity carries on. The acquisition is a taxable supply to the partner. The partner receives a tax invoice in their name for the acquisition.

The entity is registered for goods and services tax (GST).

Reasons for Decision

An entity is entitled to an input tax credit under section 11-20 of the GST Act when it makes a creditable acquisition.

Under section 11-5 of the GST Act, an entity makes a creditable acquisition if:

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it acquires anything solely or partly for a creditable purpose;

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the supply to it is a taxable supply;

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it provides, or is liable to provide, consideration for the supply; and

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it is registered, or required to be registered for GST.

In this case, the partner made the acquisition and was invoiced for it, not the entity.

However, under subsection 184-5(1) of the GST Act, a supply, acquisition or importation made by or on behalf of a partner of a partnership in his or her capacity as a partner:

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is taken to be a supply, acquisition or importation made by the partnership; and

•

is not taken to be a supply, acquisition or importation made by that partner or any other partner of the partnership.

The partner, in their capacity as a partner, made the acquisition on behalf of the entity. Therefore, under subsection 184-5(1) of the GST Act, the acquisition made by the partner is taken to be an acquisition made by the entity.

Subsection 11-15(1) of the GST Act provides that a thing is acquired for a creditable purpose to the extent that it is acquired in carrying on an enterprise.

In this case, as the acquisition relates to the enterprise that the entity carries on, the acquisition is solely for a creditable purpose. In addition, the entity is registered for GST and the supply to it is a taxable supply for which the entity provides consideration. Therefore, the acquisition is a creditable acquisition under section 11-5 of the GST Act.

As the acquisition is a creditable acquisition, the entity is entitled to an input tax credit under section 11-20 of the GST Act for the acquisition made by the partner.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 11-5
   subsection 11-15(1)
   section 11-20
   subsection 184-5(1)

Keywords
Goods & services tax
GST supplies & acquisitions
Creditable acquisition

Business Line:  GST

Date of publication:  30 November 2001

ISSN: 1445-2782