Private ruling: GST and input tax credits
Date of advice: 31 October 2017
Published: March 2018

Ruling: Q1: Are you entitled to full input tax credits for the acquisition of the property from which you will carry on your enterprise as well as on expenses relating to the building? | A1: You are entitled to full input tax credits for the acquisitions of the property and you will also be entitled to full input tax credits where you provide full consideration on expenses relating to the building.

Relevant facts and circumstances: You are a sole trader and operate an enterprise. You are registered for the goods and services tax (GST). The supply of the property to you was taxable. You obtained a small business loan in your name. Your enterprise has its own bank account. You are solely responsible for the: ● daily running of your enterprise ● business decisions ● hiring and termination of staff ● monthly loan repayments ● payment of land and tax rates ● body corporate fees and ● reporting the business’s taxation and superannuation obligations.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 11-5.

Reasons for decision: Summary: You are entitled to claim input tax credits for your creditable acquisition. You make a creditable acquisition under section 11-5 of the GST Act if you acquire anything solely or partly for a creditable purpose; the supply of the thing to you is a taxable supply; you provide, or are liable to provide consideration for the supply and you are registered or required to be registered for GST. Section 11-15 of the GST Act explains the meaning of creditable purpose. You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. You acquired the property to carry on your enterprise and the supply to you was taxable. In this case you are registered for GST. To acquire the property you obtained a small business loan in your name trading as xxx and the enterprise has its own separate bank account. In this case what needs to be determined is the amount of consideration you provided or are liable to provide for the acquisition. Based on the information provided, it is our view that the total consideration for the acquisition was provided by you. It is our view that your acquisition satisfies all of the requirements of a creditable acquisition under section 11-5 of the GST Act. Consequently, you are entitled to claim full input tax credits for the total consideration you provided. Where you provide full consideration on redoing the floor of the building, you will be entitled to full input tax credits.