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ATO Interpretative Decision

ATO ID 2001/275 (Withdrawn)

Goods and Services Tax

GST and Grouping of two partnerships
FOI status: may be released
  • This ATO ID is withdrawn because it contains a view in respect of a provision of the A New Tax System (Goods and Services Tax) Regulations 1999 that does not apply for tax periods commencing on or after 1 April 2003. Despite its withdrawal, this ATO ID continues to be a precedential ATO view in respect of decisions for tax periods commencing before 1 April 2003.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Does entity A, a partnership, satisfy the membership requirements of a GST group under section 48-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it applies to form a GST group solely with entity B, another partnership?

Decision

No, entity A does not satisfy the membership requirements of a GST group under section 48-10 of the GST Act, when it applies to form a GST group solely with entity B, another partnership.

Facts

Entity A is an Australian resident partnership that is registered for goods and services tax (GST). Entity A plans to form a GST group with entity B (also an Australian resident partnership registered for GST).

The same tax periods are applied to entity A and entity B and both account for GST on the same basis.

Entity A and entity B have jointly applied to the Commissioner, in the approved form, for approval as a GST group. In their application, entity A is nominated as the representative member for the group. Neither entity A nor entity B belong to any other GST group; nor do they have any branches that are registered under Division 54 of the GST Act.

Reasons for Decision

Subsection 48-5(1) of the GST Act sets out the requirements that must be satisfied for the Commissioner to approve two or more entities as a GST group. Paragraph 48-5(1)(b) of the GST Act requires that each of the entities satisfies the membership requirements for that GST Group.

The general membership requirements of a GST group are outlined in section 48-10 of the GST Act, which provides that an entity must:

•
be registered for GST; and
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have the same tax periods applying to it as the tax periods applying to all the other members of the GST group or proposed GST group; and
•
account on the same basis as all the other members of the GST group or proposed GST group; and
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not have any branch that is registered under Division 54 of the GST Act.

From the facts, it is considered that entity A satisfies these general membership requirements. However, entity A is a partnership and subparagraph 48-10(1)(a)(ii) of the GST Act further provides that a partnership will only satisfy the membership requirements of a GST group if it further satisfies the specific requirements listed in the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations).

In order for a partnership to be a member of a GST group, regulation 48-10.02 of the Regulations requires the partnership to have a specific type of relationship with either a company; an individual; or a trust that is also a member of the proposed GST group. In this case, the only other proposed member of the GST group is another partnership. As such, entity A is unable to have the requisite relationship with a company; an individual; or a trust and does not satisfy the specific membership requirements for a partnership (as outlined in regulation 48-10.02 of the Regulations). Therefore, entity A does not satisfy the membership requirements of a GST group listed in section 48-10 of the GST Act.

[NOTE: Based upon the same reasoning, entity B also would not satisfy the specific membership requirements outlined in regulation 48-10.02 of the Regulations as the only other proposed member of the GST group is another partnership.]

Date of decision:  9 March 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   subsection 48-5(1)
   paragraph 48-5(1)(b)
   section 48-10
   subparagraph 48-10(1)(a)(ii)
   Division 54

A New Tax System (Goods and Services Tax) Regulations 1999
   regulation 48-10.02

Keywords
Goods & services tax
GST groups

Siebel/TDMS Reference Number:  CRS51354

Business Line:  Indirect Tax

Date of publication:  8 September 2001

ISSN: 1445-2782

history
  Date: Version:
  9 March 2001 Original statement
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