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Edited version of private advice
Authorisation Number: 1051745723878
Date of advice: 2 September 2020
Ruling
Subject: GST and acquisition
Question
Will you be making a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore entitled to an input tax credit when you purchase a product?
Answer
Yes, you will be making a creditable acquisition under section 11-5 of the GST Act and therefore entitled to an input tax credit when you purchase a product.
Question
Will you be making a taxable supply under section 9-5 of the GST Act when you sell a product?
Answer
You will be making a taxable supply under section 9-5 of the GST Act when you sell a product?
Relevant facts and circumstances
You are registered for goods and services tax (GST). You carry on a business of providing business advisory services to a range of clients in various industries.
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
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
Reasons for decision
Detailed reasoning
Under section 11-5 of the 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.
As discussed, we are ruling on future purchases of a product. Previous purchases by you of the product have been taxable supplies to you and you have held valid tax invoices. You provided consideration for these previous supplies and you are registered for GST. Therefore, dot points 2-4 above will be satisfied provided future purchases are also taxable supplies to you.
What needs to be considered is whether you will acquire the product for a creditable purpose. You acquire something for a creditable purpose to the extend you acquire it in carrying on your enterprise. However, it will not be for a creditable purpose if, amongst other things, the acquisition is of a private or domestic nature.
It is considered the purchase of the product are being acquired for a creditable purpose under section 11-15 of the GST Act.
Therefore, it is considered that these purchases are creditable acquisitions under section 11-5 of the GST Act and you are and will be entitled to input tax credits under section 11-20 of the GST Act.
When you sell the product the sale of this product will be a taxable supply under section 9-5 of the GST Act.