The Administrative Appeals Tribunal has affirmed the Commissioner’s decisions disallowing input tax credits claimed by a partnership in respect of the establishment of an eco-tourism business, and cancelling the partnership's GST registration. The business had not yet started to trade, and the taxpayers’ activities were properly described as preparatory and exploratory in nature, rather than activities in the course of the commencement of an enterprise: Re Clayton and FCT  AATA 428 (Senior Member Bernard J McCabe, 25 June 2013).
The taxpayers were registered for GST and claimed input tax credits on a number of purchases made following the acquisition of a rural property adjoining an area of national park in northern NSW in 2003. They claimed they were in the process of establishing an eco-tourism business in connection with the property.
The Tribunal noted that there were a number of features of the taxpayers’ course of conduct that bore the hallmarks of a business. However, the business had not come into existence by 2011. It was not providing services or generating income, with the exception of one piece of consulting work. For a variety of reasons, some of them beyond the taxpayers’ control, including delays in the taxpayers’ development application, the activities that occurred prior to 2011 were essentially preparatory in nature. There was no expectation of earning any income in the foreseeable future from the accommodation or related activities.
The Tribunal was not satisfied the taxpayers were carrying on an enterprise. They were therefore not entitled to claim they had made creditable acquisitions during that period, and were not entitled to input tax credits. Their GST registration was properly cancelled.