GST Input Tax Credit and Acquisition

This assignment delves into the concept of GST input tax credit and its application in a practical scenario involving Big Bank Ltd. It examines how the company utilizes GSTR 2006/3 to claim credit for expenses incurred on advertising and importations. The analysis covers relevant legislation, taxation rulings, and case law to determine Big Bank Ltd.'s eligibility for input tax credit based on the 'extent' and 'creditable purpose' doctrines.

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note

1TAXATION LAW
Table of Contents
Question 1:.................................................................................................................................3
Part 1:.....................................................................................................................................3
Issue:......................................................................................................................................3
Legislations:...........................................................................................................................3
Applications:..........................................................................................................................3
Conclusion:............................................................................................................................3
Part 2:.....................................................................................................................................4
Issue:......................................................................................................................................4
Legislation:.............................................................................................................................4
Application:............................................................................................................................4
Conclusion:............................................................................................................................4
Part 3:.....................................................................................................................................5
Issue:......................................................................................................................................5
Legislation:.............................................................................................................................5
Application:............................................................................................................................5
Conclusion:............................................................................................................................5
Part 4:.....................................................................................................................................6
Issue:......................................................................................................................................6
Legislation:.............................................................................................................................6
Application:............................................................................................................................6

2TAXATION LAW
Conclusion:............................................................................................................................6
Question 2:.................................................................................................................................7
Issue:......................................................................................................................................7
Legislation:.............................................................................................................................7
Application:............................................................................................................................7
Conclusion:............................................................................................................................8
Question 3:.................................................................................................................................9
Question 4:...............................................................................................................................11
References................................................................................................................................12

3TAXATION LAW
Question 1:
Part 1:
Issue:
In this case under section 8-1 of the ITAA 1997 it is raised whether cost in incurred in
moving the machinery to a new site is allowed as allowable deduction or not.
Legislations:
a. “Section 8-1 of the Income Tax Assessment Act 1997
b. British Insulated & Helsby Cables”
Applications:
Under section8- 1 of the Income Tax Assessment Act 1997 the cost of moving the
machinery from the new site is considered as capital in nature and deduction can be claimed
for it under the following section. The depreciation incurred in moving the machinery to the
new site has increased the cost of asset. The cost that is incurred is regarded as the business
expenses which results from the daily business operating expenses (Barkoczy, et al 2016).
In the case of British Insulated & Helsby Cables the cost incurred in transporting
representing the benefits derived from shifting the depreciable assets. In compliance with the
Taxation Ruling of TD 93/126 if a machinery is installed and it is shifted to a new site will
represents a cost of capital in nature and will be treated as a deduction which is not
permissible in nature (Saad and Natrah ,2014).

4TAXATION LAW
Conclusion:
Thus the cost which is incurred in moving the machine to the new site will be
regarded as capital expenditure. In this regard no deduction is allowed under section 8-1 of
the Income Tax Assessment Act 1997.
Part 2:
Issue:
In this case the issue is the revaluation of assets that affects the insurance cover is a
deduction allowed le under section 8-1 of the Income Tax Assessment Act 1997.
Legislation:
a. Section 8-1 of the Income Tax Assessment Act 1997
Application:
In this situation the expenditure which is incurred which is related to the fixed asset
and the deduction is necessary to determine whether the expenses occurred in revaluation is
increasing the revenue producing capacity or protecting the asset. The expenditure is
repetitive in nature and it is treated as permissible deductions under section 8-1 of the
Income Tax Assessment Act 1997. The cost that is occurred in revaluating the asset does
affect the insurance cover and will be permitted as allowable deductions section 8-1 since the
expense is regarded as repetitive in nature (Russell and Tim,2016).
Conclusion:
To conclude, we can say that the cost is recurring in nature and therefore the cost
which is incurred leads to insurance cover will be considered as deduction allowed under
section 8-1 of the ITAA 1997 (Tran-Nam et al ,2016).

5TAXATION LAW
Part 3:
Issue:
In the case the legal expenses incurred as a opposing petition for winding up is a
allowable deduction with reference to 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)
Application:
Under section 8-1 of the Income Tax Assessment Act 1997, the cost incurred in
winding up of business will be allowed as deduction. The taxation ruling of ID 2004/367
represents the legal cost that will be considered for deduction and it is the cost for carrying
out the business operation through which an individual produces the taxable proceeds.
In the case of FC of T v Snowden and Wilson Pty Ltd (1958) expenses which are not
the same and which commences the lawful actions does not allow the expenses to account as
deductible expenses (Barkoczy and Stephen,2016).
The legal expenditure that will be incurred in regard to the winding up petition is a
allowable deduction and they represent being capital in nature and this expenditure are
related to business operations.
Conclusion:
In this case the cost opposing the petition of winding up is treated as non-permissible
deductions under section 8-1 of the ITAA 1997.

6TAXATION LAW
Part 4:
Issue:
In this scenario it determines whether the legal expenses that occurs for the services of
the solicitor for services of conveyance, discharge of a mortgage, and general legal advice in
regard to numerous business operations of the clients is considered as deduction allowed
under section 8-1 of the ITAA 1997.
Legislation:
a. section 8-1 of the Income Tax Assessment Act 1997
Application:
As stated in section 8-1 of the Income Tax Assessment Act 1997, the legal expense in
the business produces revenue and is a allowable deduction. There is a exception that the
legal expenses incurred will be representing the capital, domestic and private if incurred for
producing the exempt as well as non-chargeable non-exempt proceeds (Braithwaite and
Valerie, 2017).
An individual who have incurred the legal charges will not be treated as deduction
allowed provided there is association in generating the taxable income. In this situation it is
found that the legal expense incurred by the taxpayer is laid down and it the chargeable as
income which is permitted as deduction allowed under section 8-1 of the ITAA 1997.
Conclusion:
As seen the legal expenses with respect to the business operations will produce the
taxable income and is treated as deductions which is allowed as per section 8-1 of the ITAA
1997.

7TAXATION LAW
Question 2:
Issue:
In this scenario the Big Bank is concerned which determines that the input tax credit
occurred in respect to the advertising expenses under STR 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:
In the ruling of GSTR 2006/3 under Goods and Service taxation is related to the
methods that can be implemented to determine the input tax credit along with the change in
the administration so that the changes are used by the financial institution under the new
system of tax GST Act 1999. It is the extent of the creditable purpose and the actual
application of the ruling under division 11, 15 and 129 of the GST Act. This ruling will be
applied to the entities that are registered or required to obtain registration so as to acquire the
financial supplies and which goes beyond the threshold limit so as to acquire the financial
acquisition and this qualifies for the input tax credit (ROBIN, 2017).
It is found that the Big Bank Ltd have incurred an expense of $1,650,000 as GST
which includes the cost of advertisement incurred in the prior year. In respect of this situation
Big Bank Ltd applied the taxation ruling of Goods and Service taxation ruling of GSTR
2006/3 and it is applied to and the company qualifies for the lowered input tax credit. If an
entity is registered or makes registration, GST shall be payable for making the taxable

8TAXATION LAW
supplies.GST legislation scheme provides for input tax credit for the GST inclusive supplies
in acquiring the import for the entity.
“As held in the case of Ronpibon Tin NL v. FC of T the doctrine of “extent” and “to
the extent” is applied in analysing the legislation of GST. As defined in paragraph 11-5 and
15-5 in order to qualify for creditable acquisition as this acquisition must be creditable either
entirely or in parts.
Another requirements in paragraphs 11-5 and 15-5 (a) for the acquisition to qualify
as creditable or creditable importation respectively, this acquisition shall be creditable
purpose. In respect of the subsection 15-25 an import shall be creditable if it is partly for
creditable purpose. In respect of the GSTR ruling of 2006/3 Big Bank Ltd has gone beyond
the financial acquisition threshold limit and invoice is issued to Big Bank Ltd will be entitled
for the input tax credit for the GST supplies (James and Kieran, 2016)”.
Conclusion:
It is seen that that Big Bank Ltd will be eligible for claiming input tax credit under
GSTR 2006/13 for set off of the expenses incurred on advertising and for the purpose of the
creditable acquisition.

9TAXATION LAW
Question 3:

10TAXATION LAW

11TAXATION LAW
Question 4:

12TAXATION LAW
References
""Legal Database". Ato.gov.au, 2017. Online. Internet. 8 Sep. 2017. . Available:
https://www.ato.gov.au/law/view/document?docid=GST/GSTR20063/NAT/ATO/00001.
Barkoczy, Stephen, et al. Foundations Student Tax Pack 3 2016. Oxford University Press
Australia & New Zealand, 2016.
Barkoczy and Stephen.(2016) "Foundations of Taxation Law 2016." OUP Catalogue
Braithwaite and Valerie, (2017). Taxing democracy: Understanding tax avoidance and
evasion. Routledge
James and Kieran. (2016)"The Australian Taxation Office perspective on work-related travel
expense deductions for academics." International Journal of Critical Accounting 8.5-6: 345-
362.
ROBIN, H. (2017) AUSTRALIAN TAXATION LAW 2017. OXFORD University Press.
Russell and Tim.(2016) "Trust beneficiaries and exemptions from CGT: Reflections on the
Oswal litigation." Taxation in Australia 51.6 : 296.
Saad and Natrah (2014). "Tax knowledge, tax complexity and tax compliance: Taxpayers’
view." Procedia-Social and Behavioral Sciences 109 : 1069-1075.
Tran-Nam, Binh, and Michael Walpole.(2016) "Tax disputes, litigation costs and access to
tax justice." eJournal of Tax Research 14.2 : 319.

13TAXATION LAW

14TAXATION LAW