ATO Interpretative Decision
ATO ID 2001/359 (Withdrawn)
Goods and Services Tax
GST and adjustments on ceasing GST registrationFOI status: may be released
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This ATO ID is a straight application of the law and does not contain an interpretative decision.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Is the entity, a supplier of goods and services, required to make an increasing adjustment under subsection 138-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), for the assets it acquired prior to the cancellation of its goods and services tax (GST) registration?
Decision
Yes, the entity is required to make an increasing adjustment under subsection 138-5(1) of the GST Act for the assets it acquired prior to the cancellation of its GST registration.
Facts
The entity is a supplier of goods and services. The entity has cancelled its GST registration. The entity is not required to be registered for GST and was registered for GST for at least 12 months prior to the cancellation. The entity is entitled to claim input tax credits on assets it acquired prior to the cancellation of its GST registration. The last adjustment period for the acquisition of the assets did not end before the cancellation of the GST registration took effect.
The cancellation was not a result of the situations outlined in section 138-17 of the GST Act.
Reasons for Decision
Subsection 138-5(1) of the GST Act provides that the entity has an increasing adjustment for cessation of registration if:
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- its registration is cancelled; and
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- immediately before cancellation takes effect, its assets include anything in respect of which it was, or is, entitled to an input tax credit.
The entity is required to make an increasing adjustment under subsection 138-5(1) of the GST Act, for the acquisition of assets prior to the cancellation of its GST registration.
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- the GST inclusive market value of the thing immediately before the cancellation takes effect;
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- if you were, or are, entitled to an input tax credit for acquiring the thing- the amount of the consideration that you provided, or were liable to provide, for your acquisition of the thing, but only if the amount is less than that value; or
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- if you were, or are, entitled to an input tax credit for importing the thing - the cost to you of acquiring or producing the thing (plus the GST paid on its importation), but only if the amount is less than that value.]
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
subsection 138-5(1)
paragraph 138-5(1)(b)
section 138-17
Keywords
Goods and services tax
GST net amounts & adjustments
Adjustments
GST registration
Registration cancellation
ISSN: 1445-2782
| Date: | Version: | |
| 16 July 2001 | Original statement | |
| You are here | 2 September 2005 | Archived |