Can GST branching assist government organisations a machinery of government change?
GST branching requires a branch of an entity (the parent entity) to have both an independent system of accounting and to be identified separately by either:
- the nature of its activities
- its location.
A GST branch is also responsible for lodging its own activity statements. However, even though the branch may provide payment when it lodges its activity statement, the parent entity is liable for any amounts owed by the branch to us.
When registering a GST branch, we notify the parent entity of the GST branch registration number. This number will include the same Australian business number (ABN) of the parent entity together with a unique identifying extension.
A GST branch must show its GST branch registration number on tax invoices, including recipient created tax invoices (RCTIs) for taxable supplies that it makes.
A parent entity and its GST branches will need to consider impacts to their business systems and their obligations in relation to giving tax invoices.
GST branching can be used by an existing or newly formed government organisation which takes over the functions of another government organisation as a result of machinery of government (MOG) changes.
By treating the transferred functions to be undertaken by one of its branches, the existing or newly formed government organisation can register the branch as a GST branch.
How long should an abolished government organisation continue to account for transactions and complete activity statements after a MOG change?
An Administrative Arrangements Order (AAO) specifies the date on which a MOG change takes effect. If the AAO specifies the date on which a government organisation (the losing agency) is abolished, the losing agency does not exist on or after that date and its functions are transferred to another government organisation (the gaining agency). All transactions undertaken by the losing agency before this date need to be reported in its concluding activity statement. All transactions undertaken by the gaining agency from that date in administering the functions transferred from the losing agency must be reported by the gaining agency.
We understand that the implementation and changeover of transaction processing systems to accommodate a MOG change can take some time. However, a date should be arranged as soon as possible after the date of the MOG change for the gaining agency to undertake the administrative responsibilities in relation to the transferred functions (such as reporting in activity statements and issuing tax invoices).
The gaining agency must work out the extent to which it should report sales, purchases and any GST relating to the transferred functions in its activity statement, by working out what the abolished agency has already reported before the date of the MOG change.
The abolished agency will need to lodge a concluding activity statement but consideration should be given to the other tax obligations such as pay as you go withholding (PAYGW), fringe benefits tax (FBT) and fuel tax credits, which are also reported on activity statements.
The abolished agency should then cancel its ABN, GST registration and other tax registrations by completing the Application to cancel registration (NAT 2955) form.
Should an abolished government organisation cancel their registration?
If a government organisation is abolished as a result of a MOG change then it will cease to exist on and after a certain date. The abolished government organisation must cancel its GST registration after it has lodged its concluding activity statement.
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For more information on:
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- government entities not required to cancel their registration, refer to section 149-20 of the GST Act
- cancelling GST registration, refer to If
your business changes or ceases
- procedures for cancelling ABNs, GST and other tax registrations of Commonwealth government entities, visit the Department of Finance and Deregulation website at finance.gov.auExternal Link
What happens when a member of a GST group or joint venture is subject to MOG changes?
We understand MOG changes usually take immediate effect which can make it difficult for government organisations to meet their GST obligations.
As of the first tax period after 1 July 2010, certain government organisations are able to form, change or dissolve a GST group or GST joint venture on any day during a tax period.
Consideration must be given to these structures following MOG changes and, if necessary, steps should be taken to notify us of any changes as soon as possible. The representative member of a GST group or the operator of a GST joint venture is responsible for notifying us of any changes to the GST group or joint venture as soon as possible.
For GST purposes the GST group representative member lodges a single activity statement and is liable for the GST payable on all taxable supplies. Despite this special rule, a GST group member is the entity making the taxable supply and as such must issue a tax invoice for a taxable supply when requested by the recipient. You may however authorise the representative member to issue tax invoices on your behalf. The tax invoice must include your details and not the details of the representative member of your group.
GST group members and GST joint venture participants will need to consider impacts to their business systems and their obligations in relation to tax invoices.
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For more information about tax invoices and ATO discretion, refer to:
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Government-related entities can become:
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- members of GST groups under Divisions 48 and 149 of the GST Act
- participants in GST joint ventures under Division 49 of the GST Act.