ATO Rulings and Determinations
GST: new residential premises adjustments
19.12.2008
The Commissioner has issued a draft ruling which explains his view of when an adjustment for a change in extent of creditable purpose arises under Div 129 GSTA in relation to acquisitions made in constructing new residential premises (GSTR 2008/D5).
The draft ruling provides guidance on how to determine the extent to which an acquisition made in constructing new residential premises is applied for a creditable purpose where the new residential premises are being held for sale as part of an entity’s enterprise, but prior to their sale the new residential premises are rented for a period of time.
The Commissioner’s previous view on the application of Div 129 where an entity constructs new residential premises for sale but subsequently rents the premises was set out in Property and Construction Industry Partnership – Issues Register – Section 04 – Adjustment for Input Tax Credit Claims (“Issues Register”). An entity that has calculated Div 129 adjustments in relation to a particular acquisition based on the Commissioner’s previous view will be protected in respect of what it has done up to the date of issue of the final Ruling. In addition, if an entity has relied on the Commissioner’s previous view in the Issues Register to make Div 129 adjustments with respect to an acquisition, before the date of issue of the final Ruling, the entity can continue to calculate subsequent Div 129 adjustments relating to that particular acquisition on the basis of the Commissioner’s previous view.
If an entity revises (within the permitted time limit) prior adjustments relevant to an acquisition, based upon the views in the draft Ruling or the final Ruling, the entity will also be required to calculate all adjustments arising in relation to that acquisition on that same basis.
