Document ID: chunk:federal_register_of_legislation:C2025C00126:section:3:p2
Version: federal_register_of_legislation:C2025C00126
Segment Type: section
Provision Reference: s 3 (pt 2/9)
Character Range: 406731–409540

the acquisition is acquired or applied for a *creditable purpose is worked out using the following formula:

where:
extent of creditable purpose is the extent to which the purpose for which you applied or acquired the acquisition was a *creditable purpose otherwise than because of this Division, expressed as a percentage.
extent of Division 70 creditable purpose is the extent to which the purpose for which you applied or acquired the acquisition was a *creditable purpose because of this Division, expressed as a percentage.
percentage credit reduction is the reduced input tax credit percentage prescribed for the purposes of subsection 70‑5(2) for an acquisition of that kind.
Note: This section affects sections 11‑30 and 129‑40. It is used even if the reduced credit acquisition is used wholly in carrying on your enterprise (unless the acquisition was wholly for a creditable purpose because of this Division, then section 70‑15 applies).
Example 1: You make a reduced credit acquisition of $110,000, wholly for the purposes of carrying on your enterprise, partly for the purpose of making financial supplies (40%) and partly for the purpose of making taxable supplies (60%). Assume the percentage credit reduction to be 50%. The extent to which you make the acquisition for a creditable purpose is:

 Applying section 11‑30, your input tax credit is $8,000 (assuming you were liable for all the consideration).
Example 2: You subsequently apply the acquisition partly in making financial supplies (40%), partly in making taxable supplies (40%) and partly for private use (20%). The extent to which you made the acquisition for a creditable purpose is:

 Applying Division 129, your input tax credit is reduced to $6,000, giving you an increasing adjustment of $2,000.
 (3) The Commissioner may determine, in writing, one or more ways in which to work out, for the purpose of subsection (2), the extent to which an acquisition is for a *creditable purpose.

70‑25  Sale of reduced credit acquisitions (Division 132)
 (1) If:
 (a) you supply a *reduced credit acquisition in circumstances to which Division 132 applies; and
 (b) you made the acquisition for a *creditable purpose because of this Division, or you applied the acquisition for a *creditable purpose because of this Division;
this section applies for the purposes of Division 132.
 (2) In working out the full input tax credit in subsection 132‑5(2), the reference to a *creditable purpose in paragraph (a) of the definition of full input tax credit is to be read as a reference to a *creditable purpose otherwise than because of Division 70.
 (3) In working out the adjusted input tax credit in subsection 132‑5(2), the extent of the *creditable purpose because of subsection 132‑5(4) is increased by the following extent:

where:
extent