GST Input Tax Deductions: Taxable Activity and Registration

• The Taxpayer was a GST-registered company that owned land leased to one of its shareholders.
• The Taxpayer sold the land and ceased making taxable supplies but did not de-register for GST.
• The Taxpayer incurred legal fees defending shareholder claims about apparent irregularities in its accounts.
• The Taxpayer claimed input tax deductions for legal fees incurred while not making taxable supplies.
• CCS argued the Taxpayer had no taxable activity and was not entitled to the input tax deductions.
• The Taxpayer argued it had a taxable activity and the legal fees related to that activity.
• The main issue was whether the Taxpayer was entitled to the input tax deductions.
• TCO considered whether the Taxpayer was carrying on a taxable activity and whether the legal services were used for making taxable supplies.
• Another issue was whether the Taxpayer’s GST registration should be cancelled.
• TCO concluded that the Taxpayer was not entitled to the input tax deductions.

Source: taxtechnical.ird.govt.nz

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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