Taxation Law: GST Consequences and CGT Consequences

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

TAXATION LAW
1
Table of Contents
Answer to Question 1........................................................................................................2
Identification of GST Consequence...............................................................................2
Question 2:.........................................................................................................................3
Advising Emma of the capital gain tax (CGT) consequences of her transitions...........3
Reference..........................................................................................................................6

TAXATION LAW
2
Answer to Question 1
Identification of GST Consequence
Goods and Service taxes are charged on goods and services which are traded
between two registered dealers under the GST Act. The GST which is paid by a dealer
needs to be registered under the GST act so that they are able to claim input tax
credits. As per the provisions which is stated under the GST rulings, a business would
be able to claim GST credits on purchases if the business or dealer is registered under
GST (Barkoczy 2016). Furthermore, the GST is included in the prices for the goods or
services which is taken by the business. There are several services on which no GST is
charged as the same are already specified to be GST Free or input taxed. In certain
services input tax credit options are not available and even in the cases where the same
is available some conditions must be satisfied in order to claim GST credits from the
GST which is to be paid to the Australian Tax Office. The general provision relating to
GST states that if a good which is purchased or a service which is taken has GST
charges included in the same then the service provider can claim GST or input tax
credit. However, there are certain conditions which needs to be satisfied such as the
dealer should be a registered dealer under GST act and the purpose for using the
goods or service should be for office purposes and not for personal use. In addition to
this, the dealer also needs to have a tax invoice from his supplier clearly stating the
amount of purchases made. Further the taxpayer can also claim GST credit in the
business activity statement which needs to be submitted to Australian Tax Office. In
addition to this, the regulations provided by GST Act also states that the dealer can
claim GST credit any time within a period of four years.
As per the case, City Sky Co is engaged in the business of providing investment
properties and for such a purpose has acquired a vacant piece of land for which the
business has hired services of a lawyer. The case study further shows that the business
is a registered business under the GST Act and therefore can also claim input tax
credits for any transactions. The case shows that City Sky Co has purchased a vacant
land for the purpose of building 15 residential properties on the same. The vacant land
which is purchased by City Sky Co is an immovable property and therefore the same
cannot be considered to be a good or a service (Jones and Rhoades-Catanach 2013). It
is for these reasons that the same does not all under the purview of GST rulings. It is to
be noted that sale of vacant land attracts Capital gain taxes. The business of City Sky
Co is planning to construct residential properties and sell such properties. The
provisions which are stated in GST rulings makes it clear that input tax credits can be
claimed for construction materials which are used for building the residential properties
in the first place (Ato.gov.au. 2019). The only requirement for such input tax credit is
that the suppliers of the material should also be a registered dealer in respect of GST
rulings.
The rulings of GST make it clear that input tax credit can be claimed for goods
and services which are provided for business purposes and not for private purpose. In
addition to this, there is an important requirement of registration which needs to be
adhered for the purpose of claiming input tax credit (Ato.gov.au. 2019). The provisions
which is stated in GST rulings covers legal services which would be eligible for input tax
credits (Devos and Zackrisson 2015). The provisions state that if the client is registered