ATO Interpretative Decision
ATO ID 2003/1177
Goods and Services Tax
GST and date of effect of a permission to account on a cash basisFOI status: may be released
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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
Can the date of effect of the permission for an entity to account on a cash basis, under section 29-45 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), be the first day of a tax period that has ended before the entity applied to the Commissioner for permission?
Decision
No, the date of effect of the permission for an entity to account on a cash basis under section 29-45 of the GST Act cannot be the first day of a tax period that has ended before the entity applied for the permission.
Facts
The entity is registered for goods and services tax (GST) and does not meet any of the requirements in section 29-40 of the GST Act that allows an entity to choose to account for GST on a cash basis.
Consequently, the entity applied to the Commissioner for permission to account on a cash basis. The entity also requested that the date of effect for the permission to be the start of a tax period that ended prior to the entity seeking permission.
The entity satisfies the requirement under subsection 29-45(1) of the GST Act for the Commissioner to permit the entity to account on a cash basis.
Reasons for Decision
Section 29-45 of the GST Act provides that an entity may apply to the Commissioner for permission to account on a cash basis where certain requirements are satisfied.
Under subsection 29-45(2) of the GST Act, the Commissioner must notify the entity of any decision made in relation to section 29-45. Where the Commissioner decides to permit the entity to account on a cash basis, the notice must specify the date of effect of the permission.
The Commissioner considers that the date of effect of the permission will be the first day of the tax period during which the entity seeks permission or any subsequent tax period. However, the date of effect of the permission cannot be the first day of a tax period that has ended before the entity applied for the permission.
Date of decision: 6 February 2003
Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
section 29-40
section 29-45
subsection 29-45(2)
Keywords
Goods and services tax
GST tax periods
Cash basis
Non cash basis
ISSN: 1445-2782