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Ruling
Subject: GST and input tax credits
Question
Are you entitled to the input tax credits for your acquisitions?
Answer
Yes, you are entitled to the input tax credits for your acquisitions but only for those made from the date of effect of the supplier's GST registration.
Relevant facts and circumstances
You are registered for goods and services tax (GST) from 1 July 2000.
You acquired the services of another entity (the supplier) for which tax invoices were issued. He included GST in the price as shown in the tax invoices. You claimed input tax credits for these acquisitions.
In a recent review of your activity statement, your claim for input tax credits for your acquisitions from the supplier was disallowed. You were advised that the claim was disallowed because the supplier has not been registered for GST since January 2004. You were further advised that you review your records and make adjustments for your acquisitions from the supplier made from that date.
You have discussed this matter to the supplier who said that he will re-register for GST.
The Australian Business Register (ABR) and our records show that the supplier has re-registered for GST with effect from July 2004.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-5,
A New Tax System (Goods and Services Tax) Act 1999 section 11-5 and
A New Tax System (Goods and Services Tax) Act 1999 section 23-5.
Reasons for decision
Entitlement to input tax credits arise on creditable acquisitions and creditable importations.
According to section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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.
Based on the information provided, you acquired the services of the supplier for a creditable purpose and for which you provided consideration. Furthermore, you are registered for GST. As such, the requirements in paragraphs 11-5(a), 11-5(c) and 11-5 (d) of the GST Act are satisfied.
For the purpose of paragraph 11-5(b) of the GST Act, the supply of the services to you is a taxable supply if:
· the supply is made for consideration; and
· the supply is made in the course of the supplier's enterprise; and
· the supply is connected with Australia; and
· the supplier is registered or required to be registered for GST.
In this case, the supplier made the supply for consideration and in the course of his enterprise. The supply was connected with Australia. The ABR and our records show that the supplier has re-registered for GST with effect from July 2004. Therefore, the supply of the services made to you from that date onwards is a taxable supply. Accordingly, you are entitled to the input tax credits for your acquisitions from the supplier made from July 2004.
As regards the acquisitions made from January to June 2004, the supplier was not registered for GST and we do not have information to indicate that he was required to be registered during this period. Therefore, the supply of the services made to you during this period was not a taxable supply. Accordingly, you are not entitled to the input tax credits for your acquisitions from the supplier made from January to June 2004.
As you have claimed the input tax credits on your acquisitions made from January to June 2004, you must revise the relevant activity statements.