ATO Interpretative Decision
ATO ID 2001/410 (Withdrawn)
Income Tax
Rental Property Expenses - GST componentFOI status: may be released
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This ATO ID is withdrawn from the database as the ATO view is contained in the Tax Office publication Rental properties (NAT 1729).This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 25 July 2008
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a taxpayer claim a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for the GST component of an expense paid with regard to a residential rental property?
Decision
Yes, a taxpayer can claim a deduction under section 8-1 of the ITAA 1997 for the GST component of an expense paid with regard to a residential rental property.
Facts
The taxpayer owns a residential rental property.
The taxpayer has paid GST on an expense incurred in earning assessable income from that residential rental property.
Reasons for Decision
Section 40-35 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act), provides that the supply of residential accommodation is an 'input taxed' supply. If a supply is 'input taxed', it is not a 'taxable supply' under section 9-5 of the GST Act. An acquisition that relates to the making of an 'input taxed' supply will not be made for a 'creditable purpose' (subsection 11-15(2) of the GST Act) and therefore there is no entitlement to an 'input tax credit' under section 11-20 of the GST Act.
Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income. However, section 27-5 of the ITAA 1997 provides that a deduction under that Act is not allowable for an amount relating to an entitlement to an 'input tax credit'.
The taxpayer has a residential rental property which is an 'input taxed supply' under the GST Act. An expense incurred by the taxpayer in relation to the residential rental property will not be for a 'creditable purpose' under the GST Act and consequently the taxpayer is not entitled to an 'input tax credit' attributable to the expense. As the taxpayer is not entitled to claim an 'input tax credit', a deduction for the GST component of the expense is allowable under section 8-1 of the ITAA 1997.
Date of decision: 31 August 2001
Legislative References:
Income Tax Assessment Act 1997
section 8-1
section 27-5
section 9-5
subsection 11-15(2)
section 11-20
section 40-35
Keywords
Deductions and expenses
Goods and services tax
Rental expenses
Rental property
ISSN: 1445-2782
| Date: | Version: | |
| 31 August 2001 | Original statement | |
| You are here → | 25 July 2008 | Archived |
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