GST Input Tax Credit and GSTR 2006/3

This assignment delves into the concept of Goods and Services Tax (GST) input tax credit claims. It examines a specific scenario involving Big Bank Ltd, which incurred expenses for advertising inclusive of GST. The assignment analyzes how GSTR 2006/3 applies to determine Big Bank's eligibility for input tax credit based on creditable acquisitions exceeding the financial acquisition threshold. The analysis considers relevant legislation sections and legal precedents, ultimately concluding whether Big Bank can claim input tax credit for its advertising expenses.

Running head: TAXATION LAW
Taxation Law
Name of Student:
Name of University:
Author’s Note:

1TAXATION LAW
Answer 1:
Answer to requirement 1:
Issue:
In compliance with the section 8-1 of the ITAA 1997, the present issue considers whether
the cost suffered in the movement of the machinery to a new site is to be considered as allowable
deductions or not.
Legislations:
a. Section 8-1 of the Income Tax Assessment Act 1997
b. British Insulated & Helsby Cables
Applications:
The major reason for thinking about the expenditure for the allowable deductions is due
to the fact that the cost is considered as a part of the business expenses. No sort of deductions are
allowed in case of the cost that is incurred in transportation of machinery to the new site. This
follows from the 1 of the Income Tax Assessment Act 1997. According to the section 8-1 of the
Income Tax Assessment Act 1997, the obtained cost in the movement of machinery is
representative of a price which is incurred from minor changes and can be thought of as
allowable deductions (Barkoczy et al., 2016).
Based on the of British Insulated & Helsby Cables case verdict, the involved
transportation cost shows a continuous benefit on the business related matters after the shift of

2TAXATION LAW
the assets which are deprecating. The cost of occurrence in bringing the machine to a state of
through operation will be considered as revenue according to the Taxation Ruling of TD 93/126
on the installation of the machinery. Based on the present scenario, it is learnt that the cost of
occurrence in the location of the machine to the new site is representative of the cost of capital.
This will be considered as non-permissible deductions.
Conclusion:
The incurred cost in the movement of the machine to a new site represents the
movement of an asset from one place to another. This falls under the category of capital
expenditure. In concern with this, no allowable deductions will be allowed under section 8-1 of
the Income Tax Assessment Act 1997.
Answer to requirement 2:
Issue:
The present situation introduces whether the revaluation of assets can be thought of as
allowable deductions under section 8-1 of the Income Tax Assessment Act 1997.
Legislation:
a. Section 8-1 of the Income Tax Assessment Act 1997
Application:
Proper study on the present situation indicates that expenses and the fixed assets are
related. Thus the determination of the deductions is crucial for the determination of whether such

3TAXATION LAW
expenses have occurred in revaluation (Nechaev, 2014). Either it is merely obtained in the
protection of the asset or obtained for increasing the revenue producing capability. In case the
former results in a sort of benefit to the temporary character, in case the expenses are repetitive,
then under the section 8-1 of the Income Tax Assessment Act 1997, it will be treated as
permissible deductions. Proper understanding of the present situation clearly indicates that the
cost incurred in asset revaluation will be considered as allowable deductions as there are
repetitive in nature. This is in compliance with the section 8-1.
Conclusion:
It can be concluded that, according to the section 8-1 of the ITAA 1997, the price leading
to the insurance cover is treated as allowable deductions. This is because the nature of the cost is
recurrent (Woellner et al., 2016).
Answer to requirement 3:
Issue:
The situation brings to the fore, the issue regarding the fact that if the legal expenditures
the company incurred would be treated for deductions based on the section 8-1 of the ITAA
1997.
Legislation:
a. Section 8-1 of the Income Tax Assessment Act 1997
b. FC of T v Snowden and Wilson Pty Ltd (1958) 99 CLR 431)

4TAXATION LAW
Application:
The legal expenditure for differences in the winding up of the petition cannot be allowed
as deductions. This is due to the fact that they represent the nature of the capital and these are
related to the business operations (Lang, 2014).
Based on the section 8-1 of the Income Tax Assessment Act 1997, the costs for the
winding up of the business are not considered as allowable deductions. These are incurred in the
business operations. The taxation ruling of ID 2004/367 represents clearly that legal cost can be
thought for the purpose of deductions in case the cost for carrying out the business operation by
which a person responsible for the business operation moves forward (Becker, Reimer & Rust,
2015).
In situations where the expenses are unusual and it is necessary for the taxpayer to start
the lawful actions it is required to understand that it prevents the expense to qualify as deductable
(Braithwaite, 2017).
Conclusion:
Based on the situation, the cost incurred in opposing the winding up plea, will be
treated as deductions of non-permissible nature in compliance with the section 8-1 of the ITAA
1997.

5TAXATION LAW
Answer to requirement 4:
Issue:
The situation at hand helps to ascertain whether, the legal expense for the purpose of the
solicitor services connected to several businesses of the clients will be considered as permissible
deductions under section 8-1 of the ITAA 1997.
Legislation:
a. section 8-1 of the Income Tax Assessment Act 1997
Application:
In case a legal expense occurs in place of the business functions for the
production of revenue, it will be considered as allowable deductions based on the section 8-1 of
the Income Tax Assessment Act 1997. Some exceptions are there in case of legal expenses that
are related to capital, domestic and private categories. This is when the price is incurred in case
the exempt is produced and the non-chargeable non-exempt proceeds (Barkoczy, 2016).
Based on the discussion, in situations where there is no relation in the generation of the
taxable income, the persons incurring legal fees may not be treated as allowable deductions. The
legal expense incurred by the taxpayer, shows that it has association with the business in
production of the chargeable deductions. It will be considered as allowable deductions according
to the section 8-1 of the ITAA 1997.

6TAXATION LAW
Conclusion:
Based on the above case, it can be said that the legal expense occurring with respect to
the business operations to produce taxable income will be treated as allowable deductions in
compliance with section 8-1 of the ITAA 1997.
Answer to question 2:
Issue:
The present scenario for the Big Bank is concerned with the input tax credit
determination with respect to the advertising expenditure based on GSTR Act 1999.
Legislation:
a. GST Act 1999
b. paragraphs 11-5 and 15-5
c. subsection 15-25
d. Goods and Service taxation ruling of GSTR 2006/3
e. Ronpibon Tin NL v. FC of T
Application:
Guidance on the implemented policies related to the determination of the input tax credit
as also the administration for change is mentioned in the taxation ruling of Goods and Service
of GSTR 2006/3. The extent to the creditable purpose and actual application of the ruling under
division 11,15 and 129 of the GST Act is also mentioned. The ruling is applicable for taxable

7TAXATION LAW
entities registered or in the process of it, in order to obtain economic supplies past the limit of
fiscal acquisition (Barat).
Present scenario of the Big Bank shows that it has expense of $1,650,000 as GST
inclusive of the advertisement previously. It is eligible for the input tax credit or lowered input
tax credit and the taxation ruling of Goods and Service taxation ruling of GSTR 2006/3 applies.
The legislation of the GST relates to the claim of the input tax credit for the GST inclusive
supplies.
In the scenario of Ronpibon Tin NL v. FC of T the doctrine of “extent” and “to the
extent” is applied in analysing the legislation of GST. This involves the obligation in which the
method of apportion adopted must be just. Based on the paragraph 11-5 and 15-5 to qualify an
acquisition as the creditable acquisition it must be either partially or entirely creditable.
Another requirements of paragraphs 11-5 and 15-5 (a) for an acquisition to qualify as
creditable or creditable importation respectively, the acquisition must be entirely for creditable
purpose. In respect of the subsection 15-25 an import shall be viewed as creditable if it is partly
for creditable purpose. In regard to section 11-15 or 15-10 an acquisition qualifies to be
creditable if an entity makes the supplies for the purpose of claiming input tax credit. In respect
of the GSTR ruling of 2006/3 Big Bank Ltd has gone past the financial acquisition threshold
limit and the invoice that is issued to Big Bank Ltd will be entitled for input tax credit for the
GST supplies made.

8TAXATION LAW
Conclusion:
It can thus be concluded that Big Bank can claim the input tax credit in compliance with
the GSTR 2006/13 for the price incurred on the expense for advertising. This is for the creditable
acquisition.
Answer to question 3:

9TAXATION LAW

10TAXATION LAW
Answer 4:

11TAXATION LAW
References:
Barat, J. U. B. A STUDY ON THE DETERMINANTS OF TAXPAYER’S INTENTION TOWARDS MANUAL
TAX SYSTEM, CASE STUDY IN KLANG VALLEY.
Barkoczy, S. (2016). Foundations of Taxation Law 2016. OUP Catalogue.
Barkoczy, S., Nethercott, L., Devos, K., & Richardson, G. (2016). Foundations Student Tax
Pack 3 2016. Oxford University Press Australia & New Zealand.
Becker, J., Reimer, E., & Rust, A. (2015). Klaus Vogel on Double Taxation Conventions. Kluwer
Law International.
Braithwaite, V. (Ed.). (2017). Taxing democracy: Understanding tax avoidance and evasion.
Routledge.
Lang, M. (2014). Introduction to the law of double taxation conventions. Linde Verlag GmbH.
Nechaev, A. (2014). Taxation as an instrument of stimulation of innovation-active business
entities. arXiv preprint arXiv:1412.2746.
Woellner, R. H., Barkoczy, S., Murphy, S., Evans, C., & Pinto, D. (2016). Australian Taxation
Law Select: Legislation and Commentary 2016. Oxford University Press.