Private ruling: GST: Creditable acquisition of a business and business premises
Date of advice: 28 July 2016
Published: September 2016

Ruling: Q1: Was the purchase of the business (the Business) by Party A, a creditable acquisition for the purpose of section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes. As you intend on making taxable supplies of commercial residential accommodation and will not be making any input tax supplies subject to Division 87, the acquisition of your business is for a creditable purpose under section 11-15 of the GST Act. Accordingly, you meet all requirements of section 11-5 and are entitled to input tax credits for your acquisition of the Business. | Q2: Was the purchase of the Business by Party B, a creditable acquisition for the purpose of section 11-5 of the GST Act? | A2: Yes. As you intend on making taxable supplies of commercial residential accommodation and will not be making any input tax supplies subject to Division 87, the acquisition of the business premises (the Property) is for a creditable purpose under section 11-15 of the GST Act. Accordingly, you meet all requirements of section 11-5 and are entitled to input tax credits for your acquisition of the Property. | Q3: Is the amount of the input tax credit for your creditable acquisition of the Business and the Property an amount equal to the GST payable on the supply of the Business and Property for the purposes of section 11-25 of the GST Act? | A3: Yes.

Relevant facts and circumstances: Party A acquired a property Business (the Business) and Party B acquired the premises (the Property) from which the Business is conducted. Two separate sales contracts were entered into. You have supplied two invoices issued to you by the vendors for the amount of GST payable regarding their sale and your purchase of the Business and the Property. You seek assurance regarding whether the purchase of the Business and the Property are creditable acquisitions for the purposes of the GST Act and if so, that the GST paid will be claimable by you as an input tax credit. You supply a range of short-term and long-term accommodation. You, intend only to make taxable supplies of commercial residential accommodation. You will not be making any input tax supplies pursuant to Division 87 of the GST Act. Both parties are registered for GST.

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 Paragraph 11-5(a) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 11-5(b) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 11-5(c) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph11-5(d) | A New Tax System (Goods and Services Tax) Act 1999 Section 11-15 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 11-15(1) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 11-15(2) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 11-15(2)(a) | A New Tax System (Goods and Services Tax) Act 1999 Paragraph 11-15(2)(b) | A New Tax System (Goods and Services Tax) Act 1999 Section 11-25 | A New Tax System (Goods and Services Tax) Act 1999 Section 40-35 | A New Tax System (Goods and Services Tax) Act 1999 Subsection 40-35(a) | A New Tax System (Goods and Services Tax) Act 1999 Subsection 40-35(b) | A New Tax System (Goods and Services Tax) Act 1999 Division 87