Can an entity register for GST and obtain an ABN?
Non-interpretative - Straight application of the law
Entities that meet the enterprise test can register for GST and obtain an ABN. Corporations Law companies are also entitled to obtain an ABN but need to be carrying on an enterprise to be entitled to register for GST.
An entity should only have one ABN and one GST registration irrespective of the number of activities that the entity undertakes.
The enterprise test for ABN and GST purposes is broader than the business test for income tax purposes. Therefore, if an entity meets the business test for income tax purposes it will meet the enterprise test for GST and ABN purposes.
More details on the enterprise test and the indicators of a business for income tax purposes are provided at Appendix B.
The definition of enterprise includes activities done in the form of a business but excludes activities done as a private recreational pursuit or hobby and activities done by individuals or partnerships (all or most of which are individuals) without a reasonable expectation of profit or gain.
Reasonable expectation means more than a possibility, risk or chance.
Where it has been established that an ownership group consists of more than one entity, the enterprise test is applied to each individual entity to determine separate GST registration.
Therefore, it is possible for one of the entities supplying an animal to race to be registered for GST and another entity supplying the same animal to race to not be registered for GST.
As a general rule the racing of animals is not accepted as carrying on an enterprise if it is not associated with training or breeding activities unless the entity can show otherwise. Owners who have other racing involvement including training and breeding interests are more likely to meet the enterprise test.
The enterprise status of an entity can change over time. For example, an individual may start off as a hobbyist but over time puts more time, effort and expertise into their ownership interests. The entity will need to assess themselves against the enterprise criteria and at some point may change from a hobbyist to an enterprise.