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Ruling
Subject: GST and input tax credits
Question 1
To what extent can GST paid on the accounting expenses be claimed as an input credit on the taxpayer's BAS?
Answer
Input tax credits can be claimed to the extent that they relate to your business activities and you satisfy all other requirements inherent in the GST law (eg. holding a tax invoice).
Question 2
What specific amounts can be claimed as an input tax credit given a discount was applied to the pre GST figures for all items if one but not all of the items could be claimed?
Answer
Please see discussion below.
Question 3
Can postage expenses be claimed for overseas mail?
Answer
No.
Relevant facts and circumstances
The taxpayer has incurred expenses complying with overseas laws.
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 38-355
Reasons for decision
Issue 1
Question 1
Summary
You are entitled to input tax credits for any creditable acquisitions that you make.
Detailed reasoning
There are four mandatory elements for creditable acquisitions:
§ the acquisition is made for a 'creditable purpose';
§ the supply to you was taxable;
§ you provide or are liable to provide consideration for the supply; and
§ you are registered or required to be registered for GST.
Acquisitions made by you in your business role in complying with overseas laws were made for a creditable purpose. Note that compliance with foreign laws in your non-business role as a private citizen is not a creditable purpose.
The remaining three elements of a creditable acquisition are presumed to be met in this instance.
Therefore, to the extent that acquisitions you made in complying with foreign law directly relates to your business, you can claim the corresponding input tax credit. Exceptions would be acquisitions (or parts thereof) that directly relate to personal income such as personal interest earned, investment income etc.
Question 2
Summary
The Commissioner is not prescriptive in these situations, but allows for any fair and reasonable apportionment of discount.
Detailed reasoning
Given our response to question 1 above, the only calculation you may have to consider is the business versus private apportionment of the input tax credit attributable.
Question 3
Summary
International postage is GST-free.
Detailed reasoning
Item 5 in section 38-355 of the A New Tax System (Goods and Services Tax) Act 1999 effectively allows documents and forms posted (or couriered) to international destinations to be done so without the imposition of GST.
A GST-free supply cannot engender a creditable acquisition and there is no resultant input tax credit.