After graduating from Deakin University's Visual Arts program, John finally realized his dream of opening an art gallery in Melbourne. The gallery, which is called Dziko Gallery and was opened in 1999, sales original artworks and artwork reproductions (which the gallery manufactured in January of 2000).

In May of 2017, the gallery sold one original painting for $5,000. It sold it to Hannah, an Australian art collector who is also based in Melbourne. Since the gallery only sold this one painting, its total gross business income for 2017 was $5,000. Sadly, based on an objective assessment, it is projected that the gallery's sales will not exceed $10,000 in 2018.

While its sales were low in 2017, its business expenses were high. The gallery hired local artists to paint artworks to be sold. For this purpose, it purchased for them [the artists] art supplies (paints and brushes). In 2017, it purchased a package of art supplies for $1000, for which it was charged $100 in GST. The gallery also purchased 5 frames (at $100 each) for the artworks being featured for sale, for which it was charged $50 in GST. It also incurred input taxes on other overhead expenses, which totaled $15,000 in input taxes. The gallery's total 'input taxes' for the year 2017 were therefore $15,150.

1.2 Question 1

Concerned with all the expenses and limited profitability of the gallery in 2017, John turned for advice from his friend, who recently took a course on Business Tax Law at Deakin's Faculty of Business and Law. John's friend told him that he may be able to reclaim his 'input taxes' by claiming Input Tax Credits ("ITC"). John decided to seek the advice of a professional. Presume that you have just started working at the local tax firm DZE-Corp, and are asked to advise John. How much input tax credits could the gallery claim for the year 2017?

2 Part 2

2.1 Facts

In Jan 1, 2016, Dziko Gallery received payment for the purchase of an art reproduction from a UK buyer. Dziko Gallery shipped the print to the UK buyer in Jan 20, 2016.

2.2 Question 2

What are the GST implications of the export of the print [in Jan 20, 2016] to the UK?

If the UK buyer ended up deciding to return the reproduction for full refund (and the reproduction was shipped back in its original condition), what are the GST implications of the reimportation of the print back to Australia by the gallery?