Question 4 Ace Pty Ltd i wi (10 marks) an airline regularly offering extremely l

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Question 4 Ace Pty Ltd i wi (10 marks) an airline regularly offering extremely low airfares for flights is thin Australia which must be paid for in full at the time of booking. However as the prices are so low Ace finds that customers regularly book seats but later cancel the booking or never appear for the flight. In all cases Ace's policy is that customers are not entitled to a refund. Andy is an employee of Ace. He recently purchased a laptop computer costing $3,500 at a local IA HIFI electronics store. Andy often works from home completing administration tasks for Ace and he plans to use the computer at home when he undertakes such work. Andy will also use the computer when he completes his aviation administration studies at the local university When Andy was in IA HiFi he also purchased a mobile phone costing $770. The phone is for his daughter to use to keep in touch as she has just started boarding school. Required: a) Advise Ace whether they have made a taxable supply on the non-refunded bookings and are consequently liable for GST. (5 marks) b) Advise Andy what input tax credits, if any, are available in respect of the laptop computer and the mobile phone. (5 marks)

Explanation / Answer

a) Yes, Ace has made a taxable supply on the non refunded bookings and is liable for GST.

b) No . He cannot claim input tax credit on either the laptop or mobile phone as input tax credit

is claimed on goods bought for use in a business.

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