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The Federal Court (Davies J) has held that the taxpayer was not entitled to input tax credits for acquisitions made by a related company in the taxpayer's GST group in providing, and maintaining, heavily subsidised residential accommodation for their workforce in the remote Pilbara region in Western Australia, where they conducted mining operations.

Input tax credits were denied under s 11-15(2)(a) of the GST Act on the basis that the acquisitions were not made for a "creditable purpose", being acquisitions that related to the making supplies that were input taxed.

The taxpayer's argument that the acquisitions in question were made wholly for a “creditable purpose”, because the supply of the residential accommodation was not an end commercial objective in itself but was wholly incidental to the related company's mining operations as a necessary and essential part of those operations, was rejected by the Court.

Rio Tinto Services Ltd v FCT [2015] FCA 94 (Federal Court, Davies J, 19 February 2015).


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