Taxation Law

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
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Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................4
References:...............................................................................................................................10

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Answer to question 1:
Issue:
The main issue that is related to the case of City Sky Co is regarding the claim for
input tax credit originating from the creditable transaction under “sec 11-5, GSTR 1999”.
Rule:
The goods and service tax ruling of “GSTR 2008/1” provides the guidelines regarding
the input tax credit originating from the creditable transaction. The ruling is largely related to
the GST that is payable or the input tax credits under the “GST Act of 1999” (Kraal and
Kasipillai 2016). The ruling also provides the explanation when the taxpayer should maintain
their books of accounts for the GST payable or the input tax credit regarding the sale of land
under the standard agreement of land.
According to this ruling, to claim the input tax credit the taxpayer should make the
creditable acquisition or the importation. As stated under this ruling, to make the creditable
acquisition or the import the taxpayers should make the acquisition or import completely or
partially for the creditable purpose only (Ramli et al., 2015). The general claims relating to
the tax credit originates from making the creditable acquisition and creditable import. A
supplier who makes the chargeable supplies will be accountable for the GST on the supplies.
Furthermore, the supplier is also permitted to get the input tax credit for acquisition it makes
that is associated to those supplies.
Under the “sec 11-20, GST Act 1999”, a company which is registered for the GST
purpose will be permitted to obtain the input tax credit for the creditable acquisition the
business during their business course (Tran-Nam, 2019). According to the “section 11-5,
GST Act 1999” a creditable acquisition generally happens if the business makes the

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acquisition completely or partly for the creditable purpose and other related requirements of
the “section 11-5, GST Act 1999” are satisfied. As per the “section 11-15, GST Act 1999” a
business that purchases or acquires a thing for the creditable purpose up to the level that the
company acquires the item in conducting its business activities.
There are also rules regarding the reverse charge mechanism where the purchaser is
required to pay the GST. The reverse charge rules are applicable when the purchaser buys a
thing that is completely for the business purpose. The circumstances where the reverse charge
mechanism is applicable denotes that the supply is connected with Australia and the purchase
done or performed is within Australia.
Application:
The case facts obtained suggest that City Sky Co is property development and
investment company that has purchased a vacant land in Brisbane. The company bought the
land for the purpose of building 15 apartments for sale. With regard to the “section 11-5,
GST Act 1999” the acquisition of land by City Sky Co cannot be regarded as the creditable
acquisition since it is a capital asset and it amounts to an immovable property because the
land was acquired completely for constructing apartment (Verikios, Patron and Gharibnavaz
2017). Furthermore, the company is also registered for the GST purpose.
As noted under “sec 11-15, GST Act 1999”, Sky City Co acquired the land for
creditable purpose up to the level that it is carrying on its enterprise for making taxable
supplies in future (Ranjan, 2018). As eminent, Sky City Co prepares to make the taxable
supply by building 15 apartments on the land and the same will not be considered liable for
GST. Sky City Co would not be permitted to obtain the input tax credit relating to the
acquisition associated to the supplies.