ATO ID 2002/1056: GST and input tax credits for a new pneumatic bulk road tanker acquired before 23 May 2001
Date of decision: 27 September 2001
Business line: Indirect Tax

Issue
Is the entity, a business operator, entitled to an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it acquires a new pneumatic bulk road tanker before 23 May 2001?

Decision
No, the entity is not entitled to an input tax credit under section 11-20 of the GST Act when it acquires a new pneumatic bulk road tanker before 23 May 2001.

Facts
The entity is a business operator. The entity acquires a new pneumatic bulk road tanker ('tanker') before 23 May 2001. The entity is registered for goods and services tax (GST). The tanker attaches to a prime mover but is not fixed to the prime mover. It is an item of mobile plant and not a self-propelled item. It is not designed to be towed by a car. The purchase of the tanker is a creditable acquisition in accordance with section 11-5 of the GST Act. The acquisition of the tanker would have been taxable under the sales tax law if sales tax had not been ended by the A New Tax System (End of Sales Tax) Act 1999 .

Reasons for decision
Summary: Under section 11-20 of the GST Act, an entity is entitled to an input tax credit for any creditable acquisition that it makes. The entity is making a creditable acquisition in accordance with section 11-5 of the GST Act. However, section 20 of the A New Tax System (Goods and Services Tax Transition) Act 1999 (GST Transition Act) contains special transitional rules relating to the phasing in of input tax credits for new motor vehicles, certain trailers and bodies for motor vehicles. Under subsection 20(2) of the GST Transition Act, an entity is not entitled to an input tax credit if the acquisition or importation is made before 23 May 2001. Paragraph 20(1)(b) of the GST Transition Act provides that section 20 of the GST Transition Act applies to the acquisition of a new detachable trailer designed to be towed by a prime mover of a kind prescribed in the regulations. Regulation 6 of the A New Tax System (Goods and Services Tax Transition) Regulations 2000, states that for paragraph 20(1)(b) of the GST Transition Act, any kind of detachable trailer designed to be towed by a prime mover (except a kind of detachable trailer designed to be towed by a car and commonly used for private or domestic purposes) is prescribed. Examples of detachable trailers that are designed to be towed by a car and are commonly used for private or domestic purposes are box trailers, horse floats and caravans. The tanker attaches to a prime mover but is not fixed to the prime mover and is not designed to be towed by a car. This means that paragraph 20(1)(b) is satisfied and section 20 of the GST Transition Act does apply to the acquisition of a new pneumatic bulk road tanker. Therefore, the entity is not entitled to an input tax credit under section 11-20 of the GST Act when it acquires a new pneumatic bulk road tanker before 23 May 2001.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 11-5 section 11-20
Subject references: Goods and services tax GST supplies & acquisitions Creditable acquisition GST transitional issues Special transitional rules