Private ruling: GST and acquisition of a marina berth
Date of advice: 9 October 2015
Published: October 2015

Ruling: Q1: Is your acquisition of the marina berth, not used by a ship as a residence, a creditable acquisition under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes.

Relevant facts and circumstances: You are registered for GST. You undertake a number of income producing activities in your enterprise. You stated you entered into a lease for a marina berth with an entity for a particular price as part of your enterprise activities. The supplier was registered for GST. You requested a tax invoice from the supplier and were who told that no tax invoice would be issued as the marina berth was for private use only. Under a schedule to the agreement for the supply to you for the marina berth it provides, amongst other things, that the Tenant must not reside or allow anyone to reside in a vessel in the marina. You inturn rented out the marina berth, within 2 weeks of your purchase, for 6 months, (which was subsequently extended for another 6 months.) You have provided a copy of the Lease and Tax Invoice issued to your tenant. You included GST in the price of your supply.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5, | A New Tax System (Goods and Services Tax) Act 1999 section 11-5, | A New Tax System (Goods and Services Tax) Act 1999 subsection 29-70(2), and | A New Tax System (Goods and Services Tax) Act 1999 subsection 40-35(1A).

Reasons for decision: Summary: Where you make a creditable acquisition you are required to hold a tax invoice to claim the GST credit when lodging your activity statement. You make a creditable acquisition if you satisfy section 11-5 of the GST Act. The section states you make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or are liable to provide, consideration for the supply; and (d) you are registered, or required to be registered. To satisfy paragraph 11-5 (a) of the GST Act you need to acquire the marina berth for a creditable purpose. Creditable purpose is defined under section 11-15 to mean the following: (1) You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise. (2) However, you do not acquire the thing for a creditable purpose to the extent that: (a) the acquisition relates to making supplies that would be input taxed; or (b) the acquisition is of a private or domestic nature. You have stated that you acquired the marina berth in carrying on your enterprise, you are not making an input taxed supply with the marina berth when you lease it to another entity as it is not used by a ship as a residence, and you have not acquired the marina berth for a private or domestic nature. Therefore, section 11-15 of the GST Act is satisfied as is paragraph 11-5(a). To satisfy paragraph 11-5 (b) of the GST the supply of the marina berth to you needs to be a taxable supply. A supply is taxable if it satisfies section 9-5. This section states you make a taxable supply if: (a) you make a supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that you carry on; and (c) the supply is connected with the indirect tax zone; and (d) you are registered or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. In this circumstance, the supplier makes a taxable supply of the marina berth as they make it for consideration, the supply of the marina berth is in the course of an enterprise that the supplier carries on, the supply is connected with the indirect tax zone as it is done in Australia, and the supplier is registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. There are no GST-free provision that would apply, however, consideration needs to be given to whether the supply of the marina berth is input taxed under subsection 40-35(1A) of the GST Act. This subsection states: A supply of a berth at a marina that is by way of lease, hire or licence (including a renewal or extension of a lease, hire or licence is input taxed if; (a) the berth is occupied, or is to be occupied, by a ship used as a residence; and (b) …. The supply by the supplier of the marina berth is not for an input taxed supply as a tenant cannot reside in their vessel moored at the marina berth in accordance with the agreement. As such, subsection 40-35 (1A) of the GST Act will not be satisfied. Therefore paragraph 11-5 (b) of the GST is satisfied. Paragraph 11-5 (c) is satisfied as you have provided consideration for the marina berth and paragraph 11(d) is also satisfied as you are registered for GST. Therefore, section 11-5 of the GST Act is satisfied and you have made a creditable acquisition and are entitled to a GST credit. A supplier of a taxable supply must, within 28 days after a recipient of the supply requesting it, give to the recipient a tax invoice for the supply pursuant to subsection 29-70(2) of the GST Act. If you do not hold a tax invoice for a creditable acquisition when you lodge your activity statement for the tax period to which the GST credit on the acquisition would otherwise be attributable to, the GST credit it is not attributable to that tax period and is attributable to the first tax period for which your lodge an activity statement at a time you hold the tax invoice pursuant to subsection 29-10(3) of the GST Act.