Private ruling: GST and entitlement to an input tax credit
Date of advice: 23 September 2019
Published: November 2019
Ruling period: 23 September 20XX to 23 September 20XX

Ruling: Q1: Are you entitled to claim an input tax credit on your purchase of a commercial property? | A1: Yes. You are entitled to claim an input tax credit on your purchase of a commercial property because the acquisition is a creditable acquisition.

Relevant facts and circumstances: You acquired commercial premises from an entity. The supply of the property is a taxable supply.

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

Reasons for decision: Detailed Reasoning - Relevant legislation: Under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), an entity is entitled to an input tax credit for any creditable acquisition that it makes. Section 11-5 of the GST Act provides that an entity makes a creditable acquisition if: (a) it acquires anything sole or partly for a creditable purpose (b) the supply of the thing to it is a taxable supply (c) it provides, or is liable to provide, consideration for the supply, and (d) it is registered, or required to be registered, for GST. Section 11-15 of the GST Act provides that an entity acquires a thing for a creditable purpose to the extent that it acquires it in carrying on an enterprise. However, an acquisition is not for a creditable purpose to the extent that the acquisition relates to making supplies that would be input taxed or the acquisition is of a private or domestic nature. | Detailed Reasoning - Application of the law to your case: On the purchase of the property, you will lease the premises to another entity. The lease of the premises is not input taxed. As such, your acquisition is for a creditable purpose. As the acquisition satisfies all of the requirements of section 11-5 of the GST Act, you are entitled to claim an input tax credit on its purchase of the property.