Private ruling: GST
Date of advice: 17 October 2018
Published: December 2018
Ruling period: 1 July 20XX to 30 June 20XX
Date scheme commenced: ● The entity (You) is registered for the goods and services tax (GST).

Ruling: Q1: Is the entity entitled to claim a GST credit on the acquisition of the property? | A1: No.

Relevant facts and circumstances: ● The entity (You) is registered for the goods and services tax (GST). ● Pursuant to a Contract of Sale of Real Estate (Sale Contract) signed by the parties, you bought the property at the specified address (the Property) for a total sum of $X. ● The Property consists of land and a house. ● The Property has previously been sold as residential premises. ● You did not receive a tax invoice for the purchase and the Sale Contract does not state any GST amount included in the purchase price.

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 section 11-20; | A New Tax System (Goods and Services Tax) Act 1999 section 11-25; | A New Tax System (Goods and Services Tax) Act 1999 section 40-65; and | A New Tax System (Goods and Services Tax) Act 1999 section 40-75.

Reasons for decision: Summary: Under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), an entity is entitled to input tax credits for any creditable acquisition that they make. Section 11-5 of the GST Act contains the requirements for an acquisition to be a creditable acquisition. 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; and ● the supply of the thing to you is a taxable supply; and ● you provide, or are liable to provide, consideration for the supply; and ● you are registered, or required to be registered. If an entity is registered for GST, it is entitled to input tax credits for creditable acquisitions that it makes in carrying on its enterprise. One of the requirements for a creditable acquisition to be made is that the supply of the thing to the recipient is a taxable supply. An entity makes a taxable supply under section 9-5 of the GST Act if: ● it makes the supply for consideration; and ● the supply is made in the course or furtherance of the entity's enterprise; and ● the supply is connected with the indirect tax zone (that is, Australia); and ● the entity is registered or required to be registered; and ● the supply is neither GST-free nor input taxed. A sale of residential premises that is not 'new residential premises' as defined in section 40-75 of the GST Act at the time of sale is an input taxed supply under section 40-65 of the GST Act. Therefore, the sale is not a taxable supply to the purchaser. In your case, based on the facts, the property that you have purchased is an input taxed supply of residential premises by the vendor to you. As the supply of the property to you is not a taxable supply, the acquisition that you have made is not a creditable acquisition. Section 11-25 of the GST Act provides that the amount of the input tax credit for a creditable acquisition is equal to the GST payable on the supply. Where a supply is input taxed, no GST is payable on the supply. Consequently, you are not entitled to claim any GST credit on the purchase of the property.