Can a recipient who accounts for GST on a cash basis pay the GST liability up front in a tax period and claim that whole payment as input tax credit in the same tax period?
No. For any payment made in a tax period, the recipient can only claim 1/11 of that payment in that tax period, as input tax credit. The GST Act does not allow for the treatment of a part payment as one which solely represents the GST payable on the value of a taxable supply. Subsection 29-10(2)(b) of the GST Act states that a recipient who accounts on a cash basis and provides part of the consideration in a tax period is entitled to an input tax credit in that tax period, but only to the extent of the consideration provided. Where a recipient who accounts for GST on a cash basis makes an instalment payment, that payment represents part of the price of the goods financed under the hire purchase agreement. Accordingly, 1/11 of the price represents the GST payable. It is not possible to pay the GST up front.
Related Questions
- Can a recipient who accounts for GST on a cash basis pay the GST liability up front in a tax period and claim that whole payment as input tax credit in the same tax period?
- Can a dealer whose input tax credit exceeds the output tax payable in tax period or in a year claim refund of the excess credit of input tax?
- I account for GST on a cash basis. Does the cheque have to be presented on my bank statement to claim an input tax credit?
