Private ruling: GST and entitlement to input tax credits
Published: February 2014

Ruling: Q1: Are you entitled to an input tax credit (ITC) for your acquisition of a structure that you intend to use as an office? | A1: Yes


Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 11-20 | Section 11-5 | Section 11-15

Reasons for decision: Summary: Section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states that you are entitled to an input tax credit (ITC) for any creditable acquisition that you make. Section 11-5 of the GST Act provides that you make a 'creditable acquisition' if: · you acquire anything solely or partly for a creditable purpose; · the supply to you is a taxable supply; · you provide consideration for the supply; and · you are registered or required to be registered for GST. Section 11-15 provides that you acquire something for a creditable purpose to the extent that you acquire the thing in carrying on your enterprise and the acquisition does not relate to making input taxed supplies or is of a private or domestic nature. In this case: · you have acquired the goods and services in the course of carrying on your enterprise of providing services in the multi-media/information technology industry; · the supply of your services is not an input taxed supply; and · the acquisition was not of a private or domestic nature. Therefore you have acquired the goods and services for a creditable purpose. In addition, the supply to you was a taxable supply, you provided consideration for the supply and you are registered for GST thus you satisfy the other criteria of a 'creditable acquisition' in section 11-5 of the GST Act. As you have made a creditable acquisition, you are entitled to an ITC pursuant to section 11-20 of the GST Act. | Detailed Reasoning - Further issues for you to consider: If, in the future, you no longer use the office in carrying on your enterprise and this office is included as part of the residential premises you rent out or you sell the property, you may have an adjustment for GST purposes pursuant to Division 129 of the GST Act.

Relevant facts: You are registered for GST and carry on an enterprise providing services in the multi-media/information technology industry. | You account for GST on a cash basis and report quarterly. | You own a residential property which is currently tenanted. | You engaged a supplier to supply and install/erect a building (office) on the tenanted property and have negotiated with the tenant for you to use the office. | The office will house equipment related to the running of your business | The equipment is required to be in a temperature controlled environment requiring constant air conditioning as the heat generated from such activity is extreme and requires significant cooling. | The office consists of one single room constructed with a metal frame, HardiFlex sides and Colorbond roof (with a built in layer of foam as insulation). | The only utility/service connected to the office is electricity with plumbing not being connected. | The supply of the office to you was a taxable supple as evidenced by the tax invoices supplied to you by the supplier.