Private ruling: GST and entitlement to input tax credits
Date of advice: 3 May 2019
Published: June 2019
Ruling period: 1 October 2018 – 30 June 2019
Date scheme commenced: 1 January 2018

Ruling: Q1: Are you entitled to an input tax credit pursuant to section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 in respect to legal fees and real estate agent fees you have incurred? | A1: Yes

Relevant facts and circumstances: You are registered for GST effective from xx/xx/xxxx. You are a complying superannuation fund. You purchased land situated at a specified location (the Property) in xxxx. You constructed new residential premises on the land. Construction was completed in xxxx. You claimed input tax credits in respect to building costs. You sold the Property in xxxx. GST on the sale of the Property was calculated utilising the margin scheme provisions. In respect to the sale of the Property you incurred real estate agent fees totalling $x,xxx.xx (inclusive of GST) and legal fees of $x,xxx.xx (including a GST component of $xxx.xx). You hold a tax invoice in respect to the real estate agent fees dated xx/xx/xxxx. You hold a tax invoice in respect to the legal fees dated xx/xx/xxxx.

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

Reasons for decision: Summary: Note: In this reasoning, unless otherwise stated, ● all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) ● reference material(s) referred to are available on the Australian Taxation Office (ATO) website www.ato.gov.au Section 11-20 states that you are entitled to an input tax credit (ITC) for any creditable acquisition that you make. Section 11-5 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 real estate agent and legal services in the course of carrying on your enterprise; ● your acquisitions were not related to making input taxed supplies and were not of a private or domestic nature. Therefore, you have acquired the goods and services for a creditable purpose. In addition, the supplies to you were taxable supplies, you provided consideration for the supplies and you are registered for GST. Thus you satisfy the other criteria of a ‘creditable acquisition’ in section 11-5. As you have made a creditable acquisition, you are entitled to an ITC pursuant to section 11-20.