GST and property developments: Effective life is not a fair and reasonable basis for apportionment

On 10 March 2011, the AAT handed down a brief decision in which it held that the taxpayer's proposed use of "effective life" as the basis of apportionment was not acceptable as a fair and reasonable apportionment methodology: A Taxpayer v Commissioner of Taxation[2011] AATA 160. In doing so, the AAT simply adopted the views of the Commissioner set out in a public ruling – seeing "no need to elaborate further".

This significant win for the Commissioner has implications for those seeking to determine the extent to which they can claim input tax credits for property developments and their liability for increasing adjustments when properties that were intended to be sold are instead used for making input taxed supplies.