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Ruling

Subject: GST and claiming GST credits

Question

Is the operator of a GST Joint Venture entitled to claim back the GST paid on the acquisitions made by the joint venture participants for periods where the Joint Venture was not registered for GST in the GST Joint Venture's activity statement?

Advice

No, the operator of the GST Joint Venture is not entitled to claim back the GST paid on the acquisitions the joint venture participants made for periods where the Joint Venture was not registered for GST in the GST Joint Venture's activity statement.

Relevant facts

You are a GST registered Joint Venture.

The joint venture participants acquired some expenses while carrying on activities for the Joint Venture. These acquisitions were made before the Joint Venture registered for GST.

The joint venture operator has claimed these expenses in the GST Joint Venture's activity statement.

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; and

A New Tax System (Goods and Services Tax) Act 1999 section 51-35.

Reasons for decision

Under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you are entitled to an input tax credit for any creditable acquisition that you make if you are registered for GST.

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; 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.

Section 51-35 of the GST Act provides who is entitled to input tax credits in regard to entities in a joint venture.

Section 51-35 appears as follows:

51-35 Who is entitled to input tax credits

(1) If the* joint venture operator of a *GST joint venture makes a *creditable acquisition or *creditable importation, on behalf of another entity that is a *participant in the joint venture, in the course of activities for which the joint venture was entered into:

· the *joint venture operator is entitled to the input tax credit for the acquisition or importation; and

· the participant is not entitled to the input tax credit on the acquisition or importation.

(*denotes a defined term under section 195-1 of the GST Act)

Under section 51-35 of the GST Act, the Joint Venture must be registered for GST and the acquisitions must be creditable acquisitions for the joint venture operator to be able to claim input tax credits for acquisitions incurred by the joint venture participants while carrying on activities for the Joint Venture.

From the facts available, the joint venture operator has claimed GST refunds for acquisitions for periods where the Joint Venture was not registered for GST in the GST Joint Venture's activity statement.

In this case, as the acquisitions were made before the Joint Venture was registered for GST, the joint venture operator is not entitled to claim these acquisitions in the GST Joint Venture's activity statement. The joint venture operator will need to revise this activity statement as they can only account for supplies and acquisitions made from the date the Joint Venture is registered for GST and onwards in this activity statement.