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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1051441782099

Date of advice: 17 October 2018

Ruling

Subject: GST

Question

Is the entity entitled to claim a GST credit on the acquisition of the property?

Answer

No.

This ruling applies for the specified period:

1 July 20XX to 30 June 20XX

The scheme commences on the specified date.

Relevant facts and circumstances

    ● The entity (You) is registered for the goods and services tax (GST).

    ● Pursuant to a Contract of Sale of Real Estate (Sale Contract) signed by the parties, you bought the property at the specified address (the Property) for a total sum of $X.

    ● The Property consists of land and a house.

    ● The Property has previously been sold as residential premises.

    ● You did not receive a tax invoice for the purchase and the Sale Contract does not state any GST amount included in the purchase price.

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;

A New Tax System (Goods and Services Tax) Act 1999 section 11-20;

A New Tax System (Goods and Services Tax) Act 1999 section 11-25;

A New Tax System (Goods and Services Tax) Act 1999 section 40-65; and

A New Tax System (Goods and Services Tax) Act 1999 section 40-75.

Reasons for decision

Under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), an entity is entitled to input tax credits for any creditable acquisition that they make. Section 11-5 of the GST Act contains the requirements for an acquisition to be a creditable acquisition.

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.

If an entity is registered for GST, it is entitled to input tax credits for creditable acquisitions that it makes in carrying on its enterprise. One of the requirements for a creditable acquisition to be made is that the supply of the thing to the recipient is a taxable supply.

An entity makes a taxable supply under section 9-5 of the GST Act if:

    ● it makes the supply for consideration; and

    ● the supply is made in the course or furtherance of the entity's enterprise; and

    ● the supply is connected with the indirect tax zone (that is, Australia); and

    ● the entity is registered or required to be registered; and

    ● the supply is neither GST-free nor input taxed.

A sale of residential premises that is not 'new residential premises' as defined in section 40-75 of the GST Act at the time of sale is an input taxed supply under section 40-65 of the GST Act. Therefore, the sale is not a taxable supply to the purchaser.

In your case, based on the facts, the property that you have purchased is an input taxed supply of residential premises by the vendor to you. As the supply of the property to you is not a taxable supply, the acquisition that you have made is not a creditable acquisition.

Section 11-25 of the GST Act provides that the amount of the input tax credit for a creditable acquisition is equal to the GST payable on the supply. Where a supply is input taxed, no GST is payable on the supply.

Consequently, you are not entitled to claim any GST credit on the purchase of the property.


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