Taxation Law: Input Tax Credit and Capital Gains

Running Head: TAXATION LAW
TAXATION LAW
Name of the Student
Name of the University
Author Note

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Table of Contents
Response to requirement 1:........................................................................................................2
Response to requirement 2:........................................................................................................4
References:...............................................................................................................................11

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Response to requirement 1:
Issues:
The issues of determination of claims related to input tax credit which originates from
the acquisition of credit is discussed in this case.
Laws:
The transactions of a business related to acquisition or importation of the goods either
completely or for the purpose of credit is mainly dealt by “GSTR 2008/1”. A taxpayer for
getting input tax credit is required here for making creditable acquisition. It is necessary for
the taxpayers to make importation or acquisition wholly or partly for creditable purpose for
making the transaction a creditable acquisition or importation (Brandon 2019). According to
the “GST Act 1999”, a creditable acquisition and creditable importation helps in certification
of input tax credit.
The explanation of creditable acquisition is mentioned in “Div 15”, it deals also with
creditable importations (Martin and O'Connell 2018). The situation where a business is
acquiring anything which is for creditable purpose either fully or partly and a business
supplied with things for taxable purpose is referred to as creditable acquisition according to
“s 11.5, GST Act 1999”. As per “S 11.15”, acquiring of a thing is done by a business for
creditable purpose to the extent the acquired thing is consumed entirely for the purpose of
carrying the enterprise.
A supplier who is manufacturing supplies which are assessable, according to the
“GSTR 2008/1” is to be considered liable to pay GST for those supplies. The supplier enjoys
entitlement of obtaining input tax credit for the acquisition which is made by him related to
the making of the making of the supplies (James 2018). As stated by the court of “CT v HP

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Mercantile Pty Ltd (2005)”, the input tax credit will be given to the taxpayer when it is
assured that the credit on the output tax which is to be paid by the taxpayer is not included on
the sum in which the taxpayer has already paid tax at certain levels. It is to be assured by the
input tax credits that the purchase price in which GST is included, for the acquisition purpose
provide the acquisition is done only for the purpose of the business. The supplier who is
engaged in making supplies which are taxable will be responsible for the GST as well (Zu
2018). The entitlement to claim input tax credit is given to the supplier related to the
acquisition for manufacturing the taxable supplies.
The entities which are registered under GST are eligible to acquire the entitlement of
input tax credit related to creditable acquisition. When a company has made a creditable
acquisition either completely or partly for the purpose of credit is referred to be a creditable
acquisition made by that company as per the “sec 11.5, ITAA 1997”. Mostly, it is important
to identify the things that are acquired, are acquired to carry on the activities of the business
or not. For example, a shoe has been acquired by a business and it is sold from its shop
(Black 2018). Thus, it is clear that the company has acquired the shoe during the time of its
business operations.
Application:
The company here in this paper is City Sky Co. It is a property development and
investment company. A vacant land has been acquired by the company with the intention of
building approximately 15 apartments for selling purpose. This acquisition of purchase of
land is treated as creditable acquisition. The reason for the same is due to the acquirement of
the land took place for creditable purpose only. As referred to “s11.5, GST Act 1999”, it can
be said the vacant land acquired by City Sky Co for the purpose related to creditable and the