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ATO Interpretative Decision

ATO ID 2003/1014

Goods and Services Tax

GST and grouping of two individuals
FOI status: may be released
  • This ATO ID contains references to provisions of the A New Tax System (Goods and Services Tax) Regulations 1999, which have been replaced by the A New Tax System (Goods and Services Tax) Regulations 2019. This ATO ID continues to apply in relation to the remade Regulations.

    A comparison table which provides the replacement provisions in the A New Tax System (Goods and Services Tax) Regulations 2019 for regulations which are referenced in this ATO ID is available.

    This ATO ID has been amended due to changes to Division 48 of the A New Tax System (Goods and Services Tax) Act 1999 which apply to tax periods starting on or after 1 July 2010.


Status of this decision: Decision Current
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Do entity A and entity B, both individuals, 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)?

Decision

No, entity A and entity B do not satisfy the membership requirements of a GST group under section 48-10 of the GST Act, as a GST group cannot consist solely of individuals.

Facts

Entity A and entity B are Australian resident individuals who are registered for goods and services tax (GST).

Entity A and entity B have the same tax periods and account for GST on the same basis. Neither entity belongs to any other GST group nor do they have any branches that are registered under Division 54 of the GST Act.

Reasons for Decision

Section 48-10 of the GST Act sets out the membership requirements of a GST group. In relation to an individual, they must:

•
satisfy the requirements specified in the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations)
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be registered for GST
•
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
•
account for GST on the same basis as all the other members of the GST group or proposed GST group
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not be a member of any other GST group, and
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not have any branch that is registered under Division 54 of the GST Act.

Entity A and entity B are registered for GST, have the same tax periods, account for GST on the same basis, are not members of another GST group and do not have GST branches registered. Therefore, entity A and entity B will satisfy the membership requirements, if they each satisfy the requirements specified in the GST Regulations.

Regulation 48-10.04 of the GST Regulations specifies the membership requirements that must be satisfied for an individual to be a member of a GST group. It provides that an individual may be a member of a GST group where it satisfies one of the following requirements:

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for one company or more that is a member of the GST group:

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the individual has, at least, a 90% stake in the company (worked out in accordance with section 190-5 of the GST Act as if the individual were a company), or
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each shareholder of the company is either the individual or a family member of the individual, or

•
for, at least, one partnership that is a member of the GST group, the partners of the partnership are either or both of the individual and family members of the individual, or
•
for, at least, one trust that is a member of the GST group:

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the beneficiaries of the trust include either or both of the individual and family members of the individual, and
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the trustee of the trust distributes income or capital of the trust only to permitted beneficiaries, as described in regulation 48-10.03 of the GST Regulations.

It is clear from this that, for an individual to be a member of a GST group, the group must have at least one member that is a company, a partnership or a trust. The proposed GST group will consist of only entity A and entity B who are individuals. There are no members of the proposed GST group that are a company, partnership or trust. Therefore, entity A and entity B do not satisfy the requirements under regulation 48-10.04 of the GST Regulations.

Accordingly, entity A and entity B do not satisfy the membership requirements of a GST group under section 48-10 of the GST Act.

[Note: Division 48 of the GST Act was amended with effect from tax periods starting on or after 1 July 2010. Prior to the amendments, entities were required to apply to the Commissioner for approval to form a GST group. As a result of these amendments, references to the Commissioner approving the formation of a GST group have been removed from this ATO ID.]

Date of decision:  4 July 2003

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 48-10
   Division 54
   section 190-5

A New Tax System (Goods and Services Tax) Regulations 1999
   regulation 48-10.03
   regulation 48-10.04

Keywords
Goods and services tax
GST special rules
GST branches
GST groups
GST regulations
GST tax periods

Siebel/TDMS Reference Number:  3623720

Business Line:  Indirect Tax

Date of publication:  14 November 2003

ISSN: 1445-2782


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