Edited version of private advice

Authorisation Number: 1051977252299

Date of advice: 3 May 2022

Ruling

Subject: GST credits and vacant land purchase

Question 1

Can we claim GST in Unit Trust's business activity statement even though actual bank payments are not made from the Unit Trust's bank account?

Answer

No

This ruling applies for the following period:

1 July 20XX to 30 June 20XX

The scheme commences on:

3 May 20XX

Relevant facts and circumstances

The trust, is a unit trust that was established on DD/MM/YY

The unit trust registered for GST on DD/MM/YY

The trustee of the trust is X, a proprietary company limited by shares

The trustee is an Australian tax resident and is a trustee company

The X unit holders of the trust are X and X

X purchased a vacant land at X for X using his personal bank account on DD/MM/YY

The purchase of the vacant land was settled on DD/MM/YY

Copies of the contract of sale and other relevant documents have been received

The contract of sale was signed on DD/MM/YY and the named purchaser in the contract is X

The nomination form was signed on DD/MM/YY between the purchaser and the directors who are related entities and not the vendor.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 11-5

Reasons for decision

Under section 11-5 of the GST Act, you make a creditable acquisition if:

a)    you acquire anything solely or partly for a creditable purpose; and

b)    the supply of the thing to you is a taxable supply; and

c)    you provide, or are liable to provide, consideration for the supply; and

d)    you are registered or required to be registered

To be able to claim input tax credits, 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, we do not consider that the Unit Trust acquired the vacant land and did not provide consideration for the supply. The sale of the vacant land was purchased by X and not the Unit Trust. Therefore, the Unit Trust does not meet all the requirements of a creditable acquisition.

Paragraph 56 of the Goods and Services Taxation Ruling 2006/9: supples (GSTR 2006/9) state that:

56. If you make an acquisition and the other requirements of section 11-5 are met then the acquisition is a creditable acquisition. However, if you are not the recipient of the supply you will not have made a creditable acquisition, even if you provide consideration for the supply.

We acknowledge that we have received the contract of sale and the nomination form' however the vendor did not sign the nomination form. The nomination form is only signed between the purchaser and the directors who are related entities.

The named purchaser in the contract is X and the contract does not express that it was sold to the Purchaser "and/or Nominees."

We refer to the relevant clause of your contract which detail obligations of the parties.

The Unit Trust did not provide consideration for the supply as it was purchased by X using his personal bank account and no bank account was opened for the Unit Trust.

As you are not the recipient of the supply and did not provide or were liable to provide consideration, you did not make a creditable acquisition and therefore you are not entitled to claim input tax credits for your acquisition.