A GST branch is formed when a business entity separately registers its branch to suit the structural, management and accounting arrangements of the organisation. When an entity registers a branch for GST purposes, the entity is called the 'parent entity'.
A GST branch accounts for GST separately from their parent entity.
Is a GST branch the same as a GST group?
GST groups are very different to GST branches. Business entities with a specified degree of common ownership or membership may form GST groups. A member of a GST group does not account for GST; rather the representative member of the group accounts for GST and is entitled to GST credits for all group members.
How does a GST branch operate?
The branch effectively operates as a distinct entity for reporting purposes. This means:
- GST is payable on taxable sales between GST branches and the parent entity
- GST is payable on taxable sales between GST branches
- GST credits will be claimable on both of these transaction types.
When a branch makes a sale, purchase or importation, it will account for any GST payable or GST credits claimable. It will also account for any adjustments relating to the transaction.
Do branches affect GST registration?
An entity must register for GST when its GST turnover exceeds certain thresholds. When an entity operates with a branch structure, these thresholds apply to the entity as a whole, including the turnover of any branches.
When a branch is registered it receives a unique GST branch registration number. The ATO will notify the parent entity of the branch's GST branch registration number.
How do you register a GST branch?
Generally, a registered entity is able to register its branch as a GST branch if:
- the branch has an independent system of accounting
- the branch can be separately identified (either because of its distinctive activities or location)
- the entity carries on (or intends to carry on) an enterprise through the branch, and
- the entity is not a member of a GST group.
An independent system of accounting may be one that will produce or is capable of producing the results of each branch without relying on the accounts of the parent entity or another branch or any other entity. It does not mean simply another cost centre in the parent entity's accounts.
Entities can register as many of their branches as they wish, provided they satisfy these requirements.
What are the participation requirements?
An activity statement for each GST branch must be lodged for each tax period that applies to the parent entity. The parent entity is responsible for lodgment of the activity statement. However, it can be prepared and lodged by either the parent entity or the GST branch.
The parent entity must lodge a separate activity statement for any transactions not included in the activity statements of the GST branches.
The parent entity is liable for any GST amounts that the branches owe to the ATO.
When a GST branch makes a taxable sale, it issues a tax invoice that must show the registration number of the GST branch (which incorporates the Australian business number (ABN) of the parent entity).
When a branch accounts for a decreasing or increasing adjustment and issues an adjustment note, the adjustment note must also show the registration number of the GST branch.
How do you cancel a branch registration?
The parent entity must apply to the Tax Office for cancellation of the GST registration of a branch within 21 days after it ceases to carry on an enterprise through the branch.
In other circumstances, the parent entity can make a request to the Tax Office to cancel the GST branch but the branch must have been registered for 12 months or more.
However the ATO can still cancel it if satisfied that the parent entity:
- is not carrying on an enterprise through the branch
- will not carry on an enterprise through the branch in the following 12 months.
If both of these conditions apply to a GST branch, we may cancel the registration, even without a request being lodged.
In addition, a branch registration ceases to have effect if the parent entity's GST registration is cancelled.
Abstract: Explains the requirements of a GST branch and will help you understand your GST obligations if you register a GST branch.
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