Issue
Is the entity, a supplier of goods and services that is not registered for goods and services tax (GST), entitled to claim an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it purchases goods?
Decision
No, the entity is not entitled to claim an input tax credit under section 11-20 of the GST Act when it purchases goods.
Facts
The entity is a supplier of goods and services. The entity is not registered nor required to be registered for GST. The entity purchases goods. The entity uses the goods for both business and private use. The supply of the goods to the entity is a taxable supply under section 9-5 of the GST Act.
Reasons for Decision
An entity is entitled to an input tax credit under section 11-20 of the GST Act when it makes a creditable acquisition.
Section 11-5 of the GST Act sets out the requirements that must be satisfied for an acquisition to be a creditable acquisition. An entity makes a creditable acquisition if: (a) it acquires anything solely or partly for a creditable purpose; and (b) the supply to it is a taxable supply; and (c) it provides, or is liable to provide, consideration for the supply, and (d) it is registered or required to be registered.
From the facts, the entity meets the requirements in paragraphs (a), (b) and (c). However, in this case, the entity is neither registered nor required to be registered for GST. As such, the entity does not meet all the requirements of section 11-5 of the GST Act and the purchase of goods is not a creditable acquisition. Therefore, the entity is not entitled to an input tax credit under section 11-20 of the GST Act.