However, the interest component of the transaction does not attract GST, and Albert cannot claim an input tax credit. This is because the interest is for a financial supply and is input taxed. Albert's Abattoir attributes the claim to the tax period in which it completes the transaction. Leasing agreements commonly apply to property such as buildings, vehicles, office equipment and machinery. Where the lessee is registered for GST, they may be entitled to claim input tax credits or any GST included in the lease charges.
Special rules apply where the leased property is used for making financial supplies.
Contact the ATO for further information on your eligibility to claim input tax credits in this case. Where the lease agreement was entered into before 1 July 2000, the lessor may have GST obligations for the period of the contract after 1 July 2000. If ownership of the property changes hands at the end of the lease, this is a separate transaction to the lease agreement. If the buyer is registered for GST they may be entitled to claim input tax credits for any GST included in the sale price. Melinda's Speedy Pastry needs a new cash register.