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Edited version of private ruling
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Ruling
Subject: GST and entitlement to input tax credit
Question
Are you entitled to a GST credit (input tax credit) for the purchase of a motor vehicle that is used for business purposes?
Answer
Yes. You are entitled to an input tax credit for the purchase of a motor vehicle that is used for business purposes.
Relevant facts and circumstances
You are a sole trader and registered for GST.
You purchased a motor vehicle for a GST inclusive price some time ago from a supplier who was registered for GST at that time.
The car is used in the course of your business and other business avtivities for which you receive an income.
The motor vehicle is a foreign model and has not been registered for road use. The motor vehicle is unable to be driven for personal or pleasure use. It is transported by a trailer to and from the venue.
The supplier issued you with a tax invoice for your purchase of the motor vehicle. You advised that the tax invoice contains the supplier's name and Australian business number (ABN), purchase price and the amount of GST.
You have not claimed input tax credit and deductions for the purchase of this motor vehicle. You do not intend to claim input tax credits for fuel, insurance, servicing and repairs.
Reasons for decision
Section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you are entitled to input tax credits for any creditable acquisition that you make.
Creditable acquisition is defined in section 11-5 of the GST Act. It provides that you make a creditable acquisition if:
(a) you acquire anything solely or partly for a creditable purpose
(b) the supply of the thing to you is a taxable supply
(c) you provide, or are liable to provide, consideration for the supply, and
(d) you are registered, or required to be registered.
You are entitled to input tax credit for the purchase of the motor vehicle if you meet all of the above requirements
Creditable purpose
Subsection 11-15(1) of the GST Act provides that you acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. However, according to subsection
11-15(2) of the GST Act, you do not acquire the thing for a creditable purpose to the extent that:
· the acquisition relates to making supplies that would be input taxed (for example financial supplies, supply or lease of residential premises), or
· the acquisition is of a private or domestic nature.
From the facts provided, you acquired the motor vehicle for the purposes of carrying on your business and other business activities. The acquisition was not of a private or domestic nature as the motor vehicle is not registered for road use. As such, you have satisfied the requirements in paragraph 11-5(a) of the GST Act as the acquisition of the motor vehicle is for a creditable purpose.
You have also satisfied paragraphs 11-5(c) and 11-5(d) of the GST Act as you have provided consideration for the motor vehicle and you are registered for GST.
Therefore, it needs to be considered whether the supply of the motor vehicle to you was a taxable supply.
Taxable supply
Taxable supply is defined in section 9-5 of the GST Act. For the goods and services supplied to you to be a taxable supply, all the requirements listed in section 9-5 of the GST Act must be satisfied.
Section 9-5 of the GST Act provides that you make a taxable supply if:
(a) you make the supply for consideration
(b) the supply is made in the course or furtherance of an enterprise that you carry on
(c) the supply is connected with Australia, and
(d) you are registered, or required to be registered for GST.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.
The supplier sold the motor vehicle to you for consideration, the supply was made in the course or furtherance of an enterprise that the supplier carried on, the sale of the motor vehicle was connected with Australia and the supplier was registered for GST.
Further, the supply of the motor vehicle is not GST- free or input taxed under the GST Act. As such, the supply of the motor vehicle to you is a taxable supply and the requirements in paragraph 11-5(b) of the GST Act have been satisfied.
Therefore, the purchase of the motor vehicle is a creditable acquisition as you have satisfied all the requirements in section 11-5 of the GST Act. Accordingly you are entitled to an input tax credit for the purchase of the motor vehicle.
Additional Information
Subsection 29-10(3) of the GST Act provides that an entity cannot claim an input tax credit in an activity statement unless the entity holds a tax invoice for a creditable acquisition
Under section 29-70 of the GST Act, a tax invoice must set out the ABN of the entity that issues it, the price for the supply or supplies to which the tax invoice relates, and such other information as the GST Regulations specify.
Regulation 29-70.01 of the GST Regulations specifies the other information that a tax invoice must contain. If the total amount, including the GST payable for the supply or supplies to which the tax invoice relates is less than $1,000, the tax invoice must contain the following information (in addition to the supplier's ABN and the price of the supply):
a) the words "tax invoice" stated prominently;
b) the date of issue of the tax invoice;
c) the name of the supplier;
d) a brief description of each thing supplied.
If the total amount, including GST, payable for the supply or supplies to which the tax invoice relates is $1,000 or more, the tax invoice must contain the following information (in addition to the supplier's ABN and the price of the supply):
a) the words "tax invoice" stated prominently;
b) the date of issue of the tax invoice;
c) the name of the supplier;
d) the name of the recipient;
e) the address or the ABN of the recipient;
f) a brief description of each thing supplied;
g) for each description, the quantity of the goods or the extent of the service supplied.
If you have a tax invoice for a purchase and have not claimed any of the input tax credit for that purchase, you may claim it in the current or a later tax period. Please note that you cannot claim an input tax credit by revising an earlier activity statement for a tax period that ended more than four years ago.
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