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Edited version of your written advice
Authorisation Number: 1012798499713
Ruling
Subject: GST credit entitlements on purchase of motor vehicle
Question 1
Is the partnership entitled to claim an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) where a partner has purchased a vehicle on the partnership's behalf?
Answer
Yes. The partnership is entitled to claim an input tax credit under section 11-20 of the GST Act where a partner has purchased a vehicle on the partnership's behalf.
Relevant facts and circumstances
You are a partnership engaging in an enterprise.
You are registered for goods and services tax (GST).
You are made up of two partners.
You purchased a vehicle to carry out your enterprise.
The vehicle is registered in the name of one of the partners on behalf of the partnership, as the motor vehicle registration does not allow a motor vehicle to be registered in the name of a partnership or in joint names.
Relevant legislative provisions
A New Tax System (Goods and Services Tax Act) 1999 section 11-5,
A New Tax System (Goods and Services Tax Act) 1999 section 11-15,
A New Tax System (Goods and Services Tax Act) 1999 section 11-20,
A New Tax System (Goods and Services Tax Act) 1999 section 184-5 and
A New Tax System (Goods and Services Tax Act) 1999 section 195-1.
Reasons for decision
Summary
The partnership is entitled to claim a GST credit under section 11-20 of the GST Act where a partner has purchased a vehicle on the partnership's behalf.
Detailed reasoning
You, the partnership, are entitled to an input tax credit under section 11-20 of the GST Act when you make a creditable acquisition.
Section 11-5 of the A New Tax System (Goods and Services) Act 1999 (GST Act) states:
You make a creditable acquisition if:
(a) you acquire anything solely or partly for a *creditable purpose; and
(b) the supply of the thing to you is a *taxable supply; and
(c) you provide, or are liable to provide, *consideration for the supply; and
(d) you are registered, or *required to be registered.
(* denotes a defined term in section 195-1 of the GST Act)
Subsection 11-15 of the GST Act provides the meaning for the term 'creditable purpose':
1) You acquire a thing for a creditable purpose to the extent that you acquire it in *carrying on your *enterprise.
2) However, you do not acquire the thing for a creditable purpose to the extent that:
(a) the acquisition relates to making supplies that would be *input taxed; or
(b) the acquisition is of a private or domestic nature.
….
Under subsection 184-5(1) of the GST Act, a supply, acquisition or importation made by or on behalf of a partner in his or her capacity as a partner:
(a) is taken to be a supply, acquisition or importation made by the partnership, and
(b) 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, purchased a motor vehicle on your behalf. Therefore, under subsection 184-5(1) of the GST Act, the acquisitions made by the partner are taken to be acquisitions made by you.
The purchase of the motor vehicle directly relates to the carrying on of the enterprise, meaning that the acquisitions are solely for a creditable purpose. In addition, you as the partnership are registered for GST and the supply to you is a taxable supply for which you provide consideration. Therefore, the acquisition is a creditable acquisition under section 11-5 of the GST Act.
As the purchase of the motor vehicle is creditable acquisitions, you as the partnership are entitled to input tax credits under section 11-20 of the GST Act for these acquisitions made by the partner on your behalf.
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