The Administrative Appeals Tribunal (AAT) has ruled in favour of
the Australian Tax Office (ATO) on whether developers of retirement
villages can claim GST input tax credits on their construction
costs. This will potentially affect the viability and cashflow of
current and future projects.
In this alert, Partner Justin Byrne and Solicitor Mick Blanco
comment on the implications of the AAT's decision in RSPG v
Commissioner of Taxation.1
The law
Under the A New Tax System (Goods and Services Tax) Act
1999 (Cth) ("GST Act"), input tax credits can be claimed
for creditable acquisitions. Specifically, developers of retirement
villages cannot claim input tax credits on acquisitions that relate
to making input taxed supplies. Input taxed supplies include
residential premises supplied by way of lease or
license.2 Input tax credits can only be claimed to the
extent to which supplies are taxable supplies (rather than input
taxed).
