Here the AAT held that the taxpayer was not carrying on an enterprise and therefore was not entitled to the input tax credits claimed of over $30,000.
In 2003 the taxpayer purchased a former fauna park near Cairns, intending to convert it into an educational and accommodation centre. From 1 October, 2005 to 30 June, 2009, the taxpayer claimed GST input tax credits in excess of $30,000 and made reported taxable supplies of $6,029 i.e. $548 in GST payable.
In 2009 the Commissioner conducted an audit the taxpayer’s educational affairs, concluding the taxpayer was not entitled to the input tax credits claimed.
Educational argued that its enterprise was one of an educational facility that specialises in immersion teaching. The ATO’s argued that the taxpayer had ‘not undertaken business-like activities in a business-like manner.’
After consideration of the decisions in Russell and Spriggs, the AAT held in favour of the Commissioner. The key was ‘if anything, this case is about preparation for commencement, not commencement itself’ – this despite the taxpayer having sought and obtained approval for a material change in use of ‘educational establishment’ in August 2004. While the venture was well motivated, the AAT took the view it lacked commercial character. The taxpayer’s negligible takings were from hiring out its venue. Crucially no students were ever accepted and no courses offered.
There was no business plan and the Company did not make a single taxable supply as an educational academy. Unsurprisingly, the AAT took the view the planned enterprise ‘never got going.’
