GST - purchase of property

Non-binding edited private advice. This is an edited version of private advice the ATO gave to a specific taxpayer about their own circumstances. You cannot rely on it — it is not binding and provides no protection for anyone else (see PS LA 2008/4). Use it as a guide to the ATO’s thinking, not as authority.

1 Are you entitled to an input tax credit under section 11-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) on your purchase of the property located in Australia?

1 No.

You are registered for GST. You purchased a property located in Australia on (date). The seller was not registered or required to be registered for GST at the time of sale.

A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 section 11-5

You are entitled to input tax credits on your creditable acquisitions. You make a creditable acquisition where you meet the requirement of section 9-5 of the GST Act, which states: You make a creditable acquisition if: (a) you acquire anything solely or partly for a creditable purpose; and (b) the supply of the thing to you is a taxable supply; and (c) you provide, or are liable to provide, *consideration for the supply; and (d) you are *registered or *required to be registered. In order to be entitled to an input tax credit on a purchase, one of the requirements is that the supply of the thing to you is a taxable supply. For a supply to be a taxable supply, all requirements in section 9-5 of the GST must be met. One of the requirements is that the supplier is registered or required to be registered. As the seller in your case was not registered or required to be registered for GST, the requirements of section 9-5 the GST Act are not met and therefore, the sale of the property to you was not a taxable supply. Hence, you do not meet the requirement of paragraph 11-5(b) of the GST Act.

As you do not meet all of the requirements of paragraph 11-5 of the GST Act, you have not made a creditable acquisition of the property. Therefore, you are not entitled to an input tax credit on your purchase of the property.