ATO Interpretative Decision

ATO ID 2001/641 (Withdrawn)

Goods and Services Tax

GST and cancellation of registration where annual turnover is below the registration turnover threshold
FOI status: may be released

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.

Status of this decision: Decision Withdrawn 13 September 2005

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Can the entity, a supplier of goods and services that has been registered for goods and services tax (GST) for more than 12 months, have its GST registration cancelled under subsection 25-55(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when its annual turnover falls below the registration turnover threshold?

Decision

Yes, the entity that has been registered for more than 12 months can have its GST registration cancelled under subsection 25-55(1) of the GST Act when its annual turnover falls below the registration turnover threshold.

Facts

The entity is a supplier of goods and services. The entity has been registered for GST for more than 12 months. The entity is downsizing the scale of its business activities with the result that its annual turnover is below the registration turnover threshold.

The entity has applied for cancellation of its registration in the approved form.

Reasons for Decision

Under subsection 25-55(1) of the GST Act, the Commissioner must cancel an entity's GST registration if:

•: the entity applies for cancellation of registration in the approved form;
•: at the time the entity applies for cancellation of registration, the entity has been registered for at least 12 months; and
•: the Commissioner is satisfied that the entity is not required to be registered.

The entity has applied for cancellation in the approved form and has been registered for more than 12 months. Therefore, it is necessary to determine whether the Commissioner is satisfied that the entity is not required to be registered.

Under section 23-5 of the GST Act, an entity is required to be registered if it:

•: carries on an enterprise and
•: its annual turnover meets the registration turnover threshold.

The entity is downsizing the scale of its business activities with the result that its annual turnover is below the registration turnover threshold. Therefore, even though the entity is carrying on an enterprise, because its annual turnover does not meet the registration turnover threshold it is not required to be registered for GST.

Accordingly, the entity can have its GST registration cancelled under subsection 25-55(1) of the GST Act when its annual turnover falls below the registration turnover threshold.

[Note 1: As the entity is continuing its enterprise, if it at sometime in the future it meets the turnover threshold, it will be required to re-register under section 23-5 of the GST Act.

Note 2: Where an entity ceases to be registered for GST, and still holds assets for which it has claimed input tax credits, it may have an increasing adjustment in its concluding tax period (section 138-5 of the GST Act).]

Date of decision: 12 September 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 23-5
   subsection 25-55(1)
   section 138-5

Keywords
Goods & services tax
GST registration
GST annual turnover
GST turnover threshold
Registration cancellation

Business Line: GST

Date of publication: 29 November 2001

ISSN: 1445-2782

history

	Date:	Version:
	12 September 2001	Original statement
You are here →	13 September 2005	Archived

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