| Disclaimer 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 private advice
Authorisation Number: 1051895808077
Date of advice: 17 September 2021
Ruling
Subject: GST and input tax credits
Question
Are you entitled to input tax credits under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the GST included in expenses incurred, where those expenses relate to your supplies of various types of accommodation?
Answer
No.
Relevant facts and circumstances
• You are an entity.
• You carry on an enterprise and you are registered for the goods and services tax (GST).
• You provide accommodation to your employees and contractors.
• Your supplies of accommodation are input taxed supplies for GST purposes.
• You have made acquisitions and incurred expenses in respect of the premises used by you to provide accommodation to your employees and contractors.
• The things that you acquired were taxable supplies to you.
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 11-15
A New Tax System (Goods and Services Tax) Act 1999 Section 11-20
Reasons for decision
Section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that an entity is entitled to the input tax credit for any creditable acquisition that it makes.
Section 11-5 of the GST Act lists the requirements that must be satisfied for an entity to make a creditable acquisition. Section 11-5 of the GST Act provides that an entity makes a creditable acquisition if:
(a) it acquires anything solely or partly for a creditable purpose;
(b) the supply to it is a taxable supply;
(c) it provides, or is liable to provide, consideration for the supply, and
(d) it is registered or required to be registered for GST.
All the above requirements (a) to (d) under section 11-5 of the GST Act must be met for the acquisition to be a creditable acquisition.
In this case, you have made acquisitions in respect of the premises used to provide accommodation to employees and contractors who work for you in your enterprise. The things acquired by you were taxable supplies to you. You are registered for GST and you are liable to provide payment for the acquisitions. Therefore, paragraphs (b), (c) and (d) above are met.
What remains to be determined is whether paragraph (a) above is also satisfied.
Section 11-15 of the GST Act provides the meaning of creditable purpose. An entity acquires a thing for a creditable purpose to the extent that it acquires it in carrying on its enterprise. However, it does not acquire a thing for a creditable purpose to the extent that:
• the acquisition relates to making supplies that would be input taxed; or
• the acquisition is of a private or domestic nature.
The acquisitions will not be for a creditable purpose where they relate to making supplies that would be input taxed.
According to the facts, the acquisitions that you have made relate to making supplies that are input taxed. Therefore, the acquisitions are not made for a creditable purpose. As the acquisitions are not made for a creditable purpose, they do not meet all the requirements for creditable acquisitions under section 11-5 of the GST Act.
As the acquisitions are not creditable acquisitions, you are not entitled to claim input tax credits for your acquisitions under section 11-20 of the GST Act.