One of the most challenging tax issues in the horse breeding and racing industry is determining whether an activity qualifies as an “enterprise” for GST purposes. This can have significant implications for tax compliance, as many industry players delay seeking advice on GST registration and income tax status due to ignorance or complexity of the process.
A recent tax case at the Administrative Review Tribunal (ART) highlighted the importance of timely GST claims, with a taxpayer losing out on input tax credits due to missing the 4-year deadline for lodging claims. The case confirmed that taxpayers must meet specific requirements outlined in the GST Act to be entitled to input tax credits, and the ART has no discretion to allow otherwise.
The case also revealed common misunderstandings about GST law, with the taxpayer confusing input taxed supplies with input tax credits. The ART acknowledged the taxpayer’s difficulties and health issues, but ultimately upheld the ATO’s decision to disallow the input tax credits. This case serves as a reminder of the importance of understanding GST requirements and seeking timely advice to avoid costly mistakes.
