GST and motor vehicle acquisition and registration under different names

Is the entity, a sole trader, entitled to an input tax credit under section 11-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it acquires a motor vehicle solely for use in its business, but registers the vehicle in the name of another individual?

Yes, the entity is entitled to an input tax credit under section 11-20 of the GST Act when it acquires a motor vehicle solely for use in its business, but registers the vehicle in the name of another individual.

The entity is a sole trader. The entity acquired the motor vehicle solely for use in the enterprise it is carrying on.

The entity registered the motor vehicle, with the relevant State or Territory transportation department, under the name of another individual. The entity provided the consideration for the purchase of the motor vehicle. The other individual did not provide any consideration towards the purchase.

The entity holds a valid tax invoice for the acquisition of the motor vehicle that lists the entity as the purchaser. The motor vehicle was acquired after 23 May 2001.

The supply of the motor vehicle to the entity is a taxable supply under section 9-5 of the GST Act. The entity is registered for goods and services tax (GST).

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.

Under subsection 11-15(1) of the GST Act, an entity acquires a thing for a creditable purpose to the extent that it acquires the thing in carrying on its enterprise. Although the entity registers the motor vehicle under another individual's name, the entity is listed as the purchaser on the tax invoice and provided the consideration for the supply. It is the entity that acquired the motor vehicle, not the individual in whose name it is registered. The entity purchased the motor vehicle solely for use in the enterprise that it is carrying on. As such, the entity purchased the motor vehicle for a creditable purpose.

The supply of the motor vehicle to the entity is a taxable supply under section 9-5 of the GST Act. The entity provided the consideration for the purchase of the motor vehicle and is registered for GST. Accordingly, the entity is making a creditable acquisition of a motor vehicle under section 11-5 of the GST Act.

Therefore, the entity is entitled to an input tax credit under section 11-20 of the GST Act when it acquires a motor vehicle solely for use in its business, but registers the vehicle in the name of another individual.

Note: Section 20 of the A New Tax System (Goods and Services Tax Transition) Act 1999 contains special transitional rules relating to the phasing in of input tax credits for motor vehicles. Where an entity acquires a motor vehicle before 23 May 2001, it may not be entitled to an input tax credit under section 11-20 of the GST Act. See ATO ID 2001/657 and ATO ID 2002/1056 for guidance.