ATO Interpretative Decision

ATO ID 2008/76 (Withdrawn)

Goods and Services Tax

GST: has an entity 'taken into account' an input tax credit to calculate a net amount
FOI status: may be released
  • This ATOID is withdrawn. Guidance on this issue is covered by web content.
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CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Has an entity's net amount 'taken into account' an input tax credit for the purposes of subsection 29-10(4) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it has held and considered a valid tax invoice to make a partial claim for input tax credits?

Decision

Yes, an entity's net amount has 'taken into account' an input tax credit for the purposes of subsection 29-10(4) of the GST Act when it has held and considered a valid tax invoice to make a partial claim for input tax credits.

Facts

The entity is a financial supply provider which is registered for goods and services tax (GST).

The entity carries on an enterprise and makes financial supplies and taxable supplies in Australia. The entity makes acquisitions for the purpose of making financial supplies and taxable supplies. The entity accounts on a non-cash basis.

The entity exceeds the financial acquisitions threshold and is not entitled to claim input tax credits to the extent that the acquisitions relate to making financial supplies but may be entitled to claim reduced input tax credits on reduced credit acquisitions.

The entity held the required tax invoices for its creditable acquisitions in the relevant tax period and lodged a GST return to claim its entitlement to input tax credits for that period. The entity calculated its entitlement by estimating the planned use of its acquisitions and by applying a fair and reasonable apportionment method in accordance with Goods and Services Tax Ruling GSTR 2006/3 (the first apportionment method).

Then, more than 4 years after this tax period, the entity determined that by applying another apportionment method, which is also fair and reasonable and in accordance with GSTR 2006/3 (the second apportionment method), its entitlement to input tax credits in the GST return for the earlier period could increase.

Reasons for Decision

The entity made creditable acquisitions under section 11-5 of the GST Act. Each acquisition, as defined in section 11-10 of the GST Act, was made partly for a creditable purpose under subsections 11-15(1) and 11-15(2) of the GST Act.

Division 29 of the GST Act provides the attribution rules which explain when and how an entity is entitled to make a claim for an amount of input tax credits. Subsection 29-10(1) of the GST Act provides that an entity that accounts on a non-cash basis attributes input tax credits it is entitled to, to the tax period in which:

(a)
the entity has provided any of the consideration for the acquisition; or
(b)
the invoice has issued if this occurs before any of the consideration is provided.

Subsection 29-10(4) of the GST Act allows taxpayers to attribute to a later tax period input tax credits that have not been taken into account in calculating the net amount in an earlier tax period. However, from 1 July 2010, under Division 93 of the GST Act any entitlement to input tax credits may cease to the extent that the credits have not been taken into account in working out the net amount within four years from the day after the GST return is required to be lodged for the tax period to which the credits would have been attributable under the basic rules (subsections 29-10(1) and (2)).

In the present case, the input tax credits were taken into account in calculating the original net amount in an earlier tax period when they were considered by the entity in applying the first apportionment method. As such, subsection 29-10(4) does not apply to allow the entity to attribute to a later tax period the additional input tax credits calculated under the second apportionment method.

Note - the outcome would be the same in this case if the entity had considered the appropriate tax invoice and claimed an initial zero entitlement.
Note - the entity is not making an increased input tax credit claim as a result of a change in the extent to which an acquisition is applied for a creditable purpose under Division 129 of the GST Act.
Note - An entity may revise the net amount lodged in a GST return for an earlier tax period by amending the input tax credit claim provided it is made within the relevant time limits

Amendment History

Date of amendment Part Comment
10/4/2013 Reason for Decision and note. Updated for self-assessment from 1 July 2012

Date of decision:  8 May 2008

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 11-5
   section 11-10
   subsection 11-15(1)
   subsection 11-15(2)
   subsection 29-10(1)
   subsection 29-10(2)
   subsection 29-10(4)
   Division 29

Taxation Administration Act 1953
   Schedule 1 section 105-55

Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2006/3

Related ATO Interpretative Decisions
ATO ID 2008/75

Keywords
Creditable acquisition
Goods and services tax
GST input tax credits & creditable acquisitions
GST net amounts & adjustments
GST returns
GST returns, payments & refunds
GST supplies & acquisitions
GST supply
Net amounts
Taxable supply

Siebel/TDMS Reference Number:  5996976; 1-D668Q38

Business Line:  Indirect Tax

Date of publication:  23 May 2008

ISSN: 1445-2782

history
  Date: Version:
  8 May 2008 Original statement
  12 April 2013 Updated statement
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