Edited version of private ruling

Authorisation Number: 1011811650922

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Ruling

Subject: GST and entitlement to GST credits

Question 1

Are you entitled to goods and services tax (GST) credits on the purchase of the item?

Answer

No

Relevant facts and circumstances

· You operate an enterprise and are registered for GST.

· You agreed to pay part payment towards GST $S

· You paid a deposit of $T

· You paid by bank cheque $Y

· You paid a total amount of $X

· You have provided a copy of a statement signed by individuals which details two different entities.

Relevant legislative provisions

Goods and Services Tax Act 1999 section 11-5

Goods and Services Tax Act 1999 section 11-15

Goods and Services Tax Act 1999 subsection 29-10(3)

Goods and Services Tax Act 1999 subsection 29-70(1)

Detailed reasoning

Entitlement to GST Credits 

Subsection 7-1(2) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that entitlement to GST credits arise on creditable acquisitions.

Section 11-5 of the GST Act provides that you make a creditable acquisition if:

• you acquire anything solely or partly for a creditable purpose
• the supply of the thing to you is a taxable supply
• you provide, or are liable to provide, consideration for the supply, and
• you are registered, or required to be registered.

Creditable Purpose

Section 11-15 of the GST Act provides the meaning of creditable purpose. It provides:

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:

i. the acquisition relates to making supplies that would be input taxed, or

ii. the acquisition is of a private or domestic nature.

In this case it is noted:

· you have purchased the Item for a creditable purpose in carrying on your enterprise

· you are registered for GST and

· you have paid for the Item.

Therefore, where the supplier of the Item is registered or required to be registered, for GST and has made a taxable supply to you, then you are entitled to claim a GST credit. A Tax Invoice is an indication that the supplier has made a taxable supply of Item.

Under subsection 29-10(3) of the GST Act, if an entity does not hold a tax invoice for a creditable acquisition when they give the Commissioner a GST return (activity statement) for the tax period, the GST credit associated with the creditable acquisition is not attributable to that period.

You therefore, would not be entitled to claim a GST credit unless you hold a valid tax invoice.

Tax Invoice

An invoice is a document notifying an obligation to make a payment, whereas a tax invoice is a document that contains the information about a taxable supply required by the GST Act. However, the one document can be both an invoice and a tax invoice.

Subsection 29-70(1) of the GST Act provides that a tax invoice is a document that complies with the following requirements:

· it is issued by the supplier of the supply or supplies to which the document relates

· it is in the approved form

· it contain enough information to enable the following to be clearly ascertained:

(1) the supplier's identity and the supplier's Australian Business Number (ABN)

(2) if the total price of the supply or supplies is at least $1,000 or such higher amount as the regulations specify, or if the document was issued by the recipient - the recipient's identity or the recipient's ABN

(3) what is supplied, including the quantity (if applicable) and the price of what is supplied

(4) the extent to which each supply to which the document relates is a taxable supply

(5) the date the document is issued

(6) the amount of GST (if any) payable inrelation to each supply to which the document relates

(7) if the document was issued by the recipient and GST is payable in relation to any supply- that the GST is payable by the supplier.

In this case, it is noted that within the document you provided to us:

· It is not clear if the price of Item is $Y or $X, inclusive of GST

· it did not have the ABN of the supplier nor the ABN of the recipient of the supply, and

· it had the name of two entities and it is not clear which is the supplier who supplied the Item.

Therefore, from the information that you have provided, we are unable to establish:

· the GST inclusive price of Item

· which entity sold the item, and

· whether the supplier had made a taxable supply to you.

The document that you have provided is not a tax invoice.

Document treated as a Tax Invoice

A document issued by the supplier may be treated as a tax invoice under subsection 29-70(1A) of the GST Act. It states:

(1A) A document issued by an entity to another entity may be treated by the other entity as a *tax invoice for the purpose of this Act if:

(a) it would comply with the requirements for a tax invoice but for the fact that it does not contain certain information; and

(b) all of that information can be clearly ascertained from other documents given by the entity to the other entity.

Further information such as a contract of sale from the supplier, detailing the GST inclusive price and the name of the supplier, would be sufficient to treat a document as a tax invoice.