Private ruling: Entitlement to input tax credits
Date of advice: 6 May 2021
Published: July 2021

Ruling: Q1: Are you entitled to input tax credits under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the refurbishment completed by the Franchisor? Answer No, you are not entitled to input tax credits under section 11-20 of the GST Act for the refurbishment completed by the Franchisor. Under section 11-20 of the GST Act you are entitled to input tax credits for any creditable acquisition that you make. Section 11-5 explains that you make accreditable 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. As per the agreement between you and the Franchisor, the Franchisor undertook to pay for the renovations to the You did not provide and were not liable to provide any consideration (payment) for any of the costs in relation to the renovations of those areas. As a result, you did not make a creditable acquisition in relation to the renovation of those areas and as a result you are not entitled to input tax credits. 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 registered for GST. You purchased a franchise business and you are the Franchisee. You have confirmed that the Franchisor completed and paid for cost of the refurbishing as per the agreement.


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