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  • 11 July 2018

Roadmap for claiming GST input tax credits

GST registered businesses can claim GST input tax credits in respect of the GST component included in the price of goods or services purchased for use in the business. The businesses must have received a valid tax invoice (for purchases of more than $82.50) from the supplier.

GST input tax credits can be claimed up to 4 years from the due date of the activity statement in which these input tax credits could have been claimed for the first time.

Furthermore, remember that GST input tax credits cannot be claimed:

  • when purchasing GST-free items (e.g. fresh food and medicine);
  • on purchases that were used for private purposes (in such a case, apportion the GST credit between business and non-business use); nor
  • in excess of the car limit when purchasing motor vehicles for the business (because the car limit is $57,581 for 2018 and 2019, a maximum of $5,234 can be claimed as input tax credits).

Please note that the ATO has a special team investigating the claiming of GST input tax credits.  The ATO is alert to GST input tax claims that are unusual compared to claims in previous BASs.  Further, the ATO places the onus on the business claiming the GST credits to have valid tax invoices; this may seem counter-intuitive given that one could reasonably assume that the supplier should ensure that their tax invoices comply with the law.  However, the ATO has disallowed claims for GST input tax credits until the recipient has obtained a valid tax invoice from the supplier. 

Remember to account for trading stock you use for private purposes    

Proprietors of businesses that have trading stock must account for trading stock that is consumed or taken for personal use. For example, the proprietor of a supermarket may take food from the supermarket’s shelves for consumption at home.  The market value of the removed trading stock must be included in the assessable income of the entity that is operating the supermarket.

Because keeping track of the value of trading stock used for private purposes over the course of the year may be difficult, the ATO publishes industry–specific guidelines each year that sets out what is regarded as a reasonable estimate of the value of such “withdrawals” from trading stock in that particular year.

Please contact us if you have a business from which trading stock is removed for private purposes (e.g. such as a bakery, butcher, restaurant, caterer, delicatessen, greengrocer, takeaway food shop or convenience store) to ensure that private consumption of trading stock items is correctly recorded on relevant tax returns.

More tax information on cryptocurrencies

As mentioned in previous top tax tips, cryptocurrencies held as investments will be treated as CGT assets (as opposed to money or currency) and any gain on disposal will be taxed under the concessionary CGT regime (i.e. qualify for the 50% CGT discount if the cryptocurrency has been held for 12 months or more).

However, on the disposal of cryptocurrencies that are personal use assets (e.g. if use of cryptocurrencies is mainly to purchase items for personal use or consumption):

  • Capital gains will only be recognised if the cryptocurrency was originally acquired for $10,000 or more; and 
  • Capital losses will be disregarded

Cryptocurrencies acquired in a profit-making scheme or in the course of carrying on a business will be treated as trading stock (i.e. if the value of the closing stock at the end of the year is more than the opening stock at the beginning of the year, the difference must be included in assessable income).

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