In a decision handed down on Tue 25.6.2013, the AAT has found that 2 taxpayers were not carrying on an enterprise and were therefore not entitled to claim input tax credits.
The taxpayers were registered for GST and claimed input tax credits on a number of purchases made following the acquisition of a rural property in northern NSW in 2003. They claimed they were in a partnership and were in the process of establishing a business in connection with the property. The Commissioner audited the taxpayers and concluded they were not carrying on an enterprise within the meaning of the GST Act between September 2007 and July 2011. The Commissioner said the taxpayers were not entitled to claim input tax credits, and their GST registration was cancelled. The taxpayers sought review before the Tribunal.
After reviewing the evidence, the Tribunal said that, while there were some features of a business present during the period under review, “the activities are better described as preparatory and exploratory in nature”. The Tribunal said the activities may yet lead to the establishment of an enterprise, but that was not enough to meet the definition in the GST Act. The Tribunal concluded it was not satisfied they were carrying on an enterprise, meaning the taxpayers were not entitled to claim they made creditable acquisitions during that period. It therefore affirmed the objection decisions under review.
(AAT Case [2013] AATA 428, Re Clayton and FCT, AAT, McCabe SM, AAT Ref: 2012/4010, 25 June 2013.)
[LTN 120, 25/6/13]