Claiming GST credits on pre-establishment expenses

Under special rules of the GST legislation, companies may be eligible to claim GST credits for the GST paid on its pre-establishment purchases, once it is established and becomes registered for GST.


These costs may include set-up fees, business registration costs, trading stock and other items such as business premises.

For the company to be eligible to claim credits on such costs, it must meet the following requirements:

• • The purchase must be for the purpose of bringing the company into existence or for carrying on a business after it comes into existence
    
  • The purchase must not be used to make input taxed sales or for private purposes;
    
  • The company must come into existence and be registered for GST within six months after the purchase;
    
  • The purchaser must become a member, officer or employee of the company;
    
  • The company must fully reimburse the purchaser for the cost of the purchase;
    
  • The company must not be entitled to a GST credit for the purchase, if it subsequently acquires the thing from the purchaser; and
    
  • The purchaser must not be able to claim a GST credit for the purchase.

For more information on special rules for claiming GST credits, click here.