Issue
Is the entity, an individual, entitled to input tax credits under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) or a refund of the goods and services (GST) paid under section 168-5 of the GST Act, when it pays GST on the purchase of goods that it sends overseas by post?
Decision
No, the entity is not entitled to input tax credits under section 11-20 of the GST Act or a refund of the GST paid under section 168-5 of the GST Act when it pays GST on the purchase of goods that it sends overseas by post.
Facts
The entity is an individual. The entity purchases goods that it sends overseas by post. The entity is not carrying on an enterprise.
The entity is not registered or required to be registered for GST. The supply of the goods to the entity was a taxable supply under section 9-5 of the GST Act.
Reasons for Decision
Under section 11-20 of the GST Act, an entity is entitled to an input tax credit for a creditable acquisition that it makes.
The acquisition must be for a creditable purpose (paragraph 11-5(a) of the GST Act). Subsection 11-15 (1) of the GST Act provides that a thing is acquired for a creditable purpose to the extent that it is acquired in carrying on an enterprise. As the entity is not carrying on an enterprise, the acquisition of the goods is not for a creditable purpose and paragraph 11-5(a) of the GST Act is not satisfied.
Section 11-5 of the GST Act sets out the requirements for a creditable acquisition. One of the requirements is that the entity making the acquisition must be registered, or required to be registered for GST (paragraph 11-5(d) of the GST Act). In this case, as the entity is not registered for GST, paragraph 11-5(d) of the GST Act is not satisfied.
Therefore, the entity is not entitled to an input tax credit under section 11-20 of the GST Act for the GST that is included in the purchase of the goods.
Under section 168-5 of the GST Act, an entity may be entitled to a refund of the GST paid on goods purchased if the entity takes the goods overseas as accompanied baggage.
As the entity is posting the goods overseas and is not taking the goods overseas as accompanied baggage, it is not entitled to a refund under section 168-5 of the GST Act.
Therefore, the entity is not entitled to an input tax credit under section 11-20 of the GST Act nor is it entitled to a refund of the GST paid under section 168-5 of the GST Act, when it pays GST on the purchase of the goods that it sends overseas by post.