A taxpayer has been unsuccessful before the AAT in a matter concerning its claim that it was carrying on an enterprise of land development for GST purposes and therefore entitled to input tax credits (ITCs) for claimed creditable acquisitions.

The taxpayer was registered for GST in August 2010. It claimed it had purchased property in Victoria for land development and subdivision. For the periods 1 October 2010 to 31 March 2011, the taxpayer claimed a total of $226,128 in ITCs; however, throughout the period, no sales were reported. Following an ATO audit, the Commissioner found the taxpayer was not carrying on an enterprise for the purposes of the GST Act, was not entitled to ABN and GST registration, was not entitled to the ITCs, and was liable to an administrative penalty at the rate of 50%. Before the AAT, the taxpayer clarified it was only after id=”mce_marker”,128 in ITCs for the tax period ended 31 October 2010.

A key issue was the lack of documentation proving that the taxpayer was indeed the owner of the land it claimed to have purchased. Among other things, the AAT concluded the taxpayer did not have the funds required to purchase the land. It said that until such time as the land was in fact conveyed to the taxpayer, it could not possibly have commenced an enterprise involving the subdivision of that land. It held the taxpayer was not carrying on an enterprise in accordance with the GST Act, and therefore, the taxpayer was not entitled to the ITCs for the claimed expenditure in any of the months in question. In doing so, the AAT also affirmed the taxpayer was not entitled to ABN and GST registration. It also affirmed the penalty decision.

(Re Bryxl Pty Ltd as Trustee for the Kypu Trust and FCT [2015] AATA 89, AAT, File Nos: 2012/4750, 2014/2838, 2014/2839, 2014/2912, Fice SM, 19 February 2015.)

[LTN 35, 23/2/15]