Edited version of private advice

Authorisation Number: 1052121273265

Date of advice: 25 August 2023

Ruling

Subject: Claiming of input tax credits and 4-year time limits

Question

Can you, claim input tax credits for transactions occurring outside the prescribed four-year limitation period in section 93-5 of the GST Act, in circumstances where you were unable to obtain the relevant invoices?

Answer

No.

The Commissioner has no discretion to extend the four-year time limit under section 93-5.

This ruling applies for the following periods:

•         Financial years ending 30 June 2012 to

•         Financial years ending 30 June 2024.

The scheme commences on:

The date this decision is issued

Relevant facts and circumstances

•         You have an Australian Business Number (ABN) and are registered for goods and services tax (GST).

•         You lodge your activity statements (BAS) on a quarterly basis.

•         You have had issues obtaining copies of tax invoices.

•         XX invoices were provided to you on x xxxx 202X. These tax invoices are the 'relevant invoices' for this ruling. The relevant invoices related to money unilaterally deducted by Entity X from your business current and overdraft accounts.

•         The relevant tax invoices were from a third party to entity X. They were not issued to you.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 93-5

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 29-10 (1) & (2)

Reasons for decision

Section 93-5 provides:

1)    You cease to be entitled to an input tax credit for a *creditable acquisition to the extent that the input tax credit has not been taken into account, in an *assessment of a *net amount of yours, during the period of 4 years after the day on which you were required to give to the Commissioner a GST return for the tax period to which the input tax credit would be attributable under subsection 29-10(1) or (2).

2)    This section has the effect despite section 11-20 (which is about entitlement to input tax credits)

*denotes a defined term under section195-1.

Section 93-5 extinguishes an entity's entitlement to input tax credits that they would otherwise be entitled to under the Act. Based on the facts of the scheme, you have not made creditable acquisitions and therefore do not have any entitlement to input tax credits.

Section 11-20 provides that you are entitled to input tax credits for any creditable acquisition that you make.

Section 11-5 provides that 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.

To make a creditable acquisition, you must be the entity that makes the acquisition. If you do not make the acquisition, you are not entitled to any input tax credits. The relevant invoices you provided document supplies made by a third party to entity X. Based on the information in the invoices, it is the other entity who made the acquisition and not you. Therefore, it would be the other entity who would be entitled to any input credits if the acquisitions were creditable acquisitions for them.

The facts indicate that entity X have subsequently charged you an amount to recoup the expenses they have incurred for the acquisitions they have made to enforce the loan agreements. The amounts charged to you are equal or below the amounts charged for the supply by the third party to entity X.

Being charged an amount of money does not, in itself, mean that an entitlement to an input tax credit will arise. The amount must be 'consideration for a supply' that you have acquired. From the facts provided, we cannot establish that entity X made any supply to you for which the amounts charged are consideration for.

As we have concluded that you are not entitled to any input tax credits in relation to the charges made to your account, there are no input tax credits for section 93-5 to apply to. However, for completeness, if there was any underlying entitlement to an input tax credit, that credit would have been extinguished by section 93-5.

Under section 93-5 of the GST Act, an entity's entitlement to an input tax credit for a creditable acquisition ceases, to the extent that the input tax credit is not taken into account in an assessment within 4 years after the due date for lodgement of the activity statement to which the input tax credit is attributable under subsection 29-10(1) or (2).

As you account for GST on a basis other than cash basis, subsection 29-10(1) would apply to determine the tax period to which your input tax credits are attributable. Any input tax credit that you would be entitled to would be attributable to the tax period in which you either provided any consideration for the acquisition or before you provided consideration, an invoice is issued to you relating to the acquisition.

Your GST returns, the activity statements, were not lodged until, after any entitlement to an input tax credit was extinguished by section 93-5.

While we note the information you have provided on entity X's actions and the delays that you experienced in the resolution of the matters, the GST Act does not give the Commissioner any discretionary power to extend the four year time limit or to otherwise allow an entity to claim credits that they are not, or no longer entitled to. This lack of any discretionary power in relation to section 93-5 has been confirmed in numerous AAT cases. In Messenger Media and Information Technology Pty Ltd v FC of T [2023] AATA 752 Senior Member Dr L Kirk stated:

56. In Rosebridge Nominees Pty Ltd (in liq) v Commissioner of Taxation,[63] the Tribunal held that section 93-5 makes it 'abundantly clear that entitlement to input tax credits is extinguished' when the 4-year period ends.[64] Senior Member Lazanas noted that the use of the word 'ceases' is unequivocal.[65]

57. The definitive operation of section 93-5 of the GST Act was further affirmed by the Tribunal in its more recent decisions JHKW and Commissioner of Taxation[66] and H & B Auto Repair Centre Pty Ltd and Commissioner of Taxation.[67] In the latter decision, Member Mitchell confirmed that there is no discretion for the Respondent, or the Tribunal, to circumvent the operation of section 93-5.[68]

Conclusion

You are not entitled to input tax credits in relation to the 'relevant invoices' or associated charges to your accounts.

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