Private ruling: GST and creditable acquisition
Published: December 2013

Ruling: Q1: Are you entitled to the input tax credits (ITCs) under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you purchase goods and services associated with your charitable purpose? | A1: Yes.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. · You are a public charitable trust. · You have been endorsed by the Australian Taxation Office (ATO) as an income tax exempt charity and as a deductible gift recipient, and have been registered by the charitable organisation's licensing agencies in all 8 States and Territories. · You are registered for goods and services tax (GST) · You pay suppliers directly for goods and services supplied to you in the course of your charitable enterprise. · You have recently provided goods and services to a client as part of your charitable enterprise. · You allocated a budget of $xx,xxx for alterations to the home for better care and mobility. You contacted builders and requested quotes for the specified work. The contract to supply the building work was between you and the builder, not the client's parent. The builder invoiced you and you paid for the work.

Relevant legislative provisions: All references are to the A New Tax System (Goods and Services Tax) Act 1999 : Subsection 11-15(1) | Subsection 11-15(2) | Section 11-20

Reasons for decision: Summary: You are making a creditable acquisition of goods and services associated with the building and alterations and are therefore entitled to the ITCs. | Detailed Reasoning - Detailed reasoning: Section 11-20 of the GST Act provides that you are entitled to the input tax credit for any creditable acquisition that you make. You make a creditable acquisition · 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. In your case you provide consideration for the goods and services and you are registered for GST. Therefore you will be making a creditable acquisition if the supply of the goods and services to you is a taxable supply and you are acquiring the goods and services for a creditable purpose. You have contracted with a builder for the building work and alterations. The supply by the builder to you is taxable supply under the general rule. The term creditable purpose is defined in section 11-15 of the GST Act to be where you acquire a thing to carry on your enterprise to the extent that you do not use it for making supplies that would be input taxed; or the acquisition is of a private or domestic nature. Under section 9-20 of the GST Act, 'enterprise' includes activities or a series of activities done by a trustee of a trust, charitable institution or charitable fund. We only need to consider whether your acquisition of the building work and alterations is made to make input taxed supplies. Your acquisition is made in carrying on your enterprise (charitable purposes). The building works and alterations apply to your client's property, not yours. You do not acquire the building works to make input taxed supplies. On the facts provided you provide funds and other benefits for the relief of the financial difficulties and needs of your clients and their families, especially where such needs arise through serious injury, illness or death. In this case you contracted builders and other associated entities to provide building and alterations for the purpose of better care and mobility for your client that has been disabled as a result of a workplace injury which will not be input taxed supplies, and your acquisition of the supplies were not for a private or domestic nature. Therefore, to the extent that the supply of goods and services to you is a taxable supply made by the supplier and you acquire the goods and services for a creditable purpose you will be making a creditable acquisition and entitled to the associated input tax credits.