GST and entitlement to input tax credits where GST registration has been backdated

Is the entity, a business operator, entitled to an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), for an acquisition that it made before applying for goods and services tax (GST) registration, when its GST registration is backdated to a date before the acquisition?

Yes, the entity is entitled to an input tax credit under section 11-20 of the GST Act for an acquisition that it made before applying for GST registration, when its GST registration is backdated to a date before the acquisition.

The entity is a business operator. The entity made an acquisition. After making this acquisition, the entity applied for GST registration. The Commissioner registered the entity and backdated the entity's registration to a date before the entity made the acquisition.

The acquisition was for a creditable purpose, the supply to the entity was a taxable supply under section 9-5 of the GST Act and the entity provided consideration for the supply.

Section 11-20 of the GST Act provides that an entity is entitled to an input tax credit for any creditable acquisition that it makes. Under section 11-5 of the GST Act, an entity makes a creditable acquisition if: • it acquires anything solely or partly for a creditable purpose; • the supply of the thing to it is a taxable supply; • it provides, or is liable to provide, consideration for the supply, and • it is registered or required to be registered for GST.

The entity's acquisition was for a creditable purpose, the supply to the entity was a taxable supply and the entity provided consideration for the supply.

However, at the time of making the acquisition the entity was not registered for GST. After making the acquisition, the entity applied for GST registration. The Commissioner registered the entity and backdated the entity's registration to a date before the entity made the acquisition.

Section 25-15 of the GST Act deals with the effect of backdating an entity's registration. Paragraph 25-15(b) of the GST Act provides that when the Commissioner backdates an entity's registration, the entity is taken to have been registered from and including its backdated registration day for the purposes of determining whether an acquisition the entity made on or after that day, was a creditable acquisition.

Therefore, the entity is taken to have been registered from the day to which its GST registration was backdated. As this day is before the entity made the acquisition, the entity is taken to have been registered when it made the acquisition.

As all the requirements in section 11-5 of the GST Act are met, the entity is making a creditable acquisition. Accordingly, the entity is entitled to an input tax credit under section 11-20 of the GST Act for an acquisition it made before applying for GST registration, when its GST registration is backdated to a date before the entity made the acquisition. [Note 1: Where an entity's registration is backdated, it is also taken to have been registered for GST from and including its registration day for the purposes of determining whether the entity made a taxable supply under section 9-5 of the GST Act or a creditable importation under section 15-5 of the GST Act. Note 2: An entity is not entitled to an input tax credit under section 11-20 of the GST Act for acquisitions made prior to the date of effect of its GST registration (see ATO ID 2002/438). Note 3: A company may be entitled to input tax credits for pre-establishment costs incurred prior to the date of registration under Division 60 of the GST Act.]