Issue
Has an entity's net amount 'taken into account' an input tax credit for the purposes of subsection 29-10(4) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it has held and considered a valid tax invoice to make a partial claim for input tax credits?
Decision
Yes, an entity's net amount has 'taken into account' an input tax credit for the purposes of subsection 29-10(4) of the GST Act when it has held and considered a valid tax invoice to make a partial claim for input tax credits.
Facts
The entity is a financial supply provider which is registered for goods and services tax (GST).
The entity carries on an enterprise and makes financial supplies and taxable supplies in Australia. The entity makes acquisitions for the purpose of making financial supplies and taxable supplies. The entity accounts on a non-cash basis.
The entity exceeds the financial acquisitions threshold and is not entitled to claim input tax credits to the extent that the acquisitions relate to making financial supplies but may be entitled to claim reduced input tax credits on reduced credit acquisitions.
The entity held the required tax invoices for its creditable acquisitions in the relevant tax period and lodged a GST return to claim its entitlement to input tax credits for that period. The entity calculated its entitlement by estimating the planned use of its acquisitions and by applying a fair and reasonable apportionment method in accordance with Goods and Services Tax Ruling GSTR 2006/3 (the first apportionment method).
Then, more than 4 years after this tax period, the entity determined that by applying another apportionment method, which is also fair and reasonable and in accordance with GSTR 2006/3 (the second apportionment method), its entitlement to input tax credits in the GST return for the earlier period could increase.
Reasons for Decision
The entity made creditable acquisitions under section 11-5 of the GST Act. Each acquisition, as defined in section 11-10 of the GST Act, was made partly for a creditable purpose under subsections 11-15(1) and 11-15(2) of the GST Act.
Division 29 of the GST Act provides the attribution rules which explain when and how an entity is entitled to make a claim for an amount of input tax credits. Subsection 29-10(1) of the GST Act provides that an entity that accounts on a non-cash basis attributes input tax credits it is entitled to, to the tax period in which: (a) the entity has provided any of the consideration for the acquisition; or (b) the invoice has issued if this occurs before any of the consideration is provided.
Subsection 29-10(4) of the GST Act allows taxpayers to attribute to a later tax period input tax credits that have not been taken into account in calculating the net amount in an earlier tax period. However, from 1 July 2010, under Division 93 of the GST Act any entitlement to input tax credits may cease to the extent that the credits have not been taken into account in working out the net amount within four years from the day after the GST return is required to be lodged for the tax period to which the credits would have been attributable under the basic rules (subsections 29-10(1) and (2)).
In the present case, the input tax credits were taken into account in calculating the original net amount in an earlier tax period when they were considered by the entity in applying the first apportionment method. As such, subsection 29-10(4) does not apply to allow the entity to attribute to a later tax period the additional input tax credits calculated under the second apportionment method. Note - the outcome would be the same in this case if the entity had considered the appropriate tax invoice and claimed an initial zero entitlement. Note - the entity is not making an increased input tax credit claim as a result of a change in the extent to which an acquisition is applied for a creditable purpose under Division 129 of the GST Act. Note - An entity may revise the net amount lodged in a GST return for an earlier tax period by amending the input tax credit claim provided it is made within the relevant time limits
Amendment History
Date of amendment Part Comment 10/4/2013 Reason for Decision and note. Updated for self-assessment from 1 July 2012
Date of amendment | Part | Comment
10/4/2013 | Reason for Decision and note. | Updated for self-assessment from 1 July 2012