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Tax Case: No recovery of input tax credits for trust


The Full Court of the Federal Court Australia (Hill, Stone & Allsop JJ) in its decision on the appeal to the AAT Recoveries Trust case (H P Mercantile Pty Ltd v Commissioner of Taxation [2005] FCAFC 126) has now given strong judicial guidance on the core GST concept of whether an acquisition is made for a 'creditable purpose' such that the taxpayer is entitled to claim an input tax credit. This is a critical design feature of value added taxes like the Australian GST, as expressly identified by the Court, because it ensures no cascading of GST so that the tax is only levied on the 'value added' by a business.

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Rhys Penning
Rhys Penning is a Partner in EY’s Indirect Tax practice, specialising in GST with a sector focus on infrastructure and real estate projects and transactions. He has extensive experience in financing structures with a view to maximising GST recoveries/minimising GST leakage for transaction parties. Coming from a legal background, Rhys marries deep technical knowledge and experience with a practical approach to identifying and reporting GST obligations and entitlements in a commercial context. - Current at 21 October 2016
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