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Edited version of private advice

Authorisation Number: 1051745723878

Date of advice: 2 September 2020

Ruling

Subject: GST and acquisition

Question

Will you be making a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore entitled to an input tax credit when you purchase a product?

Answer

Yes, you will be making a creditable acquisition under section 11-5 of the GST Act and therefore entitled to an input tax credit when you purchase a product.

Question

Will you be making a taxable supply under section 9-5 of the GST Act when you sell a product?

Answer

You will be making a taxable supply under section 9-5 of the GST Act when you sell a product?

Relevant facts and circumstances

You are registered for goods and services tax (GST). You carry on a business of providing business advisory services to a range of clients in various industries.

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 11-20

A New Tax System (Goods and Services Tax) Act 1999 section 9-5

Reasons for decision

Detailed reasoning

Under section 11-5 of the GST Act you make a creditable acquisition if:

·         you acquire anything solely or partly for a creditable purpose, and

·         the supply of the thing to you is a taxable supply, and

·         you provide, or are liable to provide, consideration for the supply, and

·         you are registered or required to be registered for GST.

As discussed, we are ruling on future purchases of a product. Previous purchases by you of the product have been taxable supplies to you and you have held valid tax invoices. You provided consideration for these previous supplies and you are registered for GST. Therefore, dot points 2-4 above will be satisfied provided future purchases are also taxable supplies to you.

What needs to be considered is whether you will acquire the product for a creditable purpose. You acquire something for a creditable purpose to the extend you acquire it in carrying on your enterprise. However, it will not be for a creditable purpose if, amongst other things, the acquisition is of a private or domestic nature.

It is considered the purchase of the product are being acquired for a creditable purpose under section 11-15 of the GST Act.

Therefore, it is considered that these purchases are creditable acquisitions under section 11-5 of the GST Act and you are and will be entitled to input tax credits under section 11-20 of the GST Act.

When you sell the product the sale of this product will be a taxable supply under section 9-5 of the GST Act.

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