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The ATO has published a Decision Impact Statement in relation to the AAT decision in Alexander Drysdale and FCT [2008] AATA 393; 2008 ATC 10-027. The case concerned whether the taxpayer was carrying on an enterprise for the purposes of s 9-20 of the GST Act. The taxpayer expended approximately $425,000 on a boat and associated acquisitions. At or about the time he purchased the boat, the Applicant entered into a "sub-dealers" agreement with the vendor, under which he would receive $5,000 commission for each boat of the same type sold within Victoria during the term of the agreement. No boats were sold and the AAT found that the acquisition of the boat and associated acquisitions by the taxpayer were not creditable acquisitions, as the acquisitions were not made in carrying on an enterprise.

According to the ATO, the decision confirms that a taxpayer is required to demonstrate that sufficient indicators of a business exist to establish that activities have been done in the form of a business for the purpose of s 9-20(1)(a) of the GST Act  The decision also confirms that the depreciating value of an asset should be taken into account when determining whether there is a reasonable expectation of profit or gain for the purposes of s 9-20(2)(c) of the GST Act.

For a copy of the Decision Impact Statement, go here

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