ATO Interpretative Decision

ATO ID 2001/556 (Withdrawn)

Goods and Services Tax

GST and entitlement to an input tax credit
FOI status: may be released

This ATO ID is a straight application of the law and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Is the entity, a recipient of goods who is not registered or required to be registered for goods and services tax (GST), 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 the GST that is included in the price of goods acquired?

Decision

No, the entity is not entitled to an input tax credit under section 11-20 of the GST Act for the GST that is included in the price of goods acquired.

Facts

The entity is a recipient that is not registered nor required to be registered for GST. The entity is not carrying on an enterprise.

The supply of the goods to the entity is a taxable supply under section 9-5 of the GST Act.

Reasons for Decision

Under section 11-20 of the GST Act, an entity is entitled to an input tax credit for any creditable acquisition that it makes.

Section 11-5 of the GST Act sets out the requirements for a creditable acquisition. An entity makes a creditable acquisition if:

a): it acquires anything solely or partly for a creditable purpose; and
b): the supply of the thing to it is a taxable supply; and
c): it provides, or is liable to provide, consideration for the supply; and
d): it is registered, or required to be registered for GST.

The acquisition must be for a creditable purpose (paragraph 11-5(a) of the GST Act). 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. As the entity is not carrying on an enterprise, the acquisition is not for a creditable purpose. Therefore, paragraph 11-5(a) of the GST Act is not satisfied.

In addition, as the entity making the acquisition is neither registered nor required to be registered for GST, paragraph 11-5(d) of the GST Act is not satisfied.

As all the requirements in section 11-5 of the GST Act are not met, the entity is not making a creditable acquisition when it purchases the goods. Therefore, the entity is not entitled to an input tax credit under section 11-20 of the GST Act for the GST that is included in the price of the goods acquired.

Date of decision: 9 August 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   section 11-5
   paragraph 11-5(a)
   paragraph 11-5(d)
   subsection 11-15(1)
   section 11-20

Keywords
Goods & services tax
GST registration
Creditable acquisition
Creditable purpose
GST enterprise

Business Line: GST

Date of publication: 3 November 2001

ISSN: 1445-2782

history

	Date:	Version:
	9 August 2001	Original statement
You are here	13 September 2005	Archived

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