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Edited version of private ruling
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Ruling
Subject: GST and request to change from annual reporting to quarterly reporting
Issue 1
Question 1
Can you revoke your goods and services tax (GST) reporting option from annual reporting to quarterly reporting with effect from 1 July 2010?
Advice/Answers
No.
Question 2
Will your GST annual election cease to have effect if your projected GST turnover calculated in September 2010, is greater than the registration turnover threshold?
Advice/Answers
No.
Relevant facts
· You are a company and are registered for GST.
· You elected to report GST annually.
· You wish to change from annual GST reporting to quarterly GST reporting as you advise you purchased a business in the certain month in late 2010.
· You advise that your projected annual GST turnover will be greater than the registration turnover threshold.
· You were not aware until just prior to the particular month in late 2010 that you were going to purchase the business.
· Your representative was not aware of your intention to purchase the business until you contacted him just prior to the particular month 2010.
· You wish to report GST quarterly effective from 1 July 2010.
· You have requested the Commissioner in the approved form to revoke your annual GST election.
Reasons for decision
Question 1
Can you revoke your goods and services tax (GST) reporting option from annual reporting to quarterly reporting with effect from 1 July 2010?
Summary
You cannot revoke your annual GST election from 1 July 2010. You can however revoke your annual GST election from 1 July 2011.
Detailed reasoning
In accordance with Division 151 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you made an election to lodge your GST returns on an annual basis.
Subsection 151-25(1) of the GST Act provides that your election to report GST annually ceases to have effect if:
· you revoke it by notifying the Commissioner in the approved form or
· the Commissioner disallows it if the Commissioner is satisfied that you have failed to comply with one or more of your obligations under a taxation law or
· on 31 July in a financial year, you are required to be registered for GST, or
· in a case where you are the representative member of a GST group, the membership of the GST group changes.
In your case you notified the Commissioner in the approved form that you wanted to change your annual GST reporting to quarterly GST reporting.
Subsection 151-25(2) of the GST Act specifies when you are able to revoke your election to report annually. Under paragraph 151(2)(a) if you notify the Commissioner of the revocation of your election on or before 28 October in a financial year, your annual election will cease to have effect from 1 July of that year.
However, if you notify the Commissioner of the revocation of your election after 28 October in a financial year, paragraph 151-25(2)(b) of the GST Act provides that the revocation of your election is taken to have effect, or has effect from the start of the next financial year.
In your case, as your request was made after 28 October 2010, the requirement of paragraph
151-25(2)(a) of the GST Act has not been satisfied.
Consequently, under the requirements of subsection 151-25(2) of the GST Act you cannot revoke your election to report and pay GST annually from 1 July 2010.
There is no discretion in the GST legislation for the Commissioner to allow the revocation of your election to take effect from 1 July 2010.
However, you can revoke your annual election with effect from 1 July 2011.
Question 2
Will your GST annual election cease to have effect if your projected GST turnover calculated in September 2010, is greater than the registration turnover threshold?
Summary
Your annual GST election will not cease to have effect from 1 July 2010.
Detailed reasoning
Paragraph 151-25(1)(c) and subsection 151-25(5) of the GST Act provide that your election to report annually ceases to have effect from the start of the financial year if, on the 31 July of that financial year, you are required to be registered for GST.
Section 23-5 of the GST Act provides that you are required to be registered for GST if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold. The GST registration turnover threshold is $75,000.
If your projected GST turnover met the registration turnover threshold of $75,000 on 31 July 2010 you would have been required to be registered for GST on 31 July 2010 and your annual election would have ceased to have effect from 1 July 2010.
In your case however, you were not aware until a particular month 2010 that you were to purchase a business and you determined later in 2010 when it was purchased, that your projected GST turnover would be greater than the registration turnover threshold. As such, as of
31 July 2010 you were not aware that you were required to be registered for GST.
Therefore, paragraph 151-25(c) and section 151-25(5) of the GST Act cannot be satisfied and you are not able to change your GST reporting option to quarterly reporting from 1 July 2010.
There is no discretion in the GST legislation for the Commissioner to allow the cessation of your annual election to take effect from the start of the financial year where you become required to be registered for GST at a date later than 31 July of that financial year.
Consequently, under the requirements of the GST Act the Commissioner cannot grant your request to change your GST reporting method from annual GST reporting to GST quarterly reporting from 1 July 2010.
Additional information
Although you are unable to change your GST annual election from 1 July 2010, you will be able to commence GST quarterly reporting from the commencement of the next financial year, that is, 1 July 2011.
Your representative has advised us to initiate the change to quarterly GST reporting from
1 July 2011 and we advise that we have requested the appropriate area to make the necessary changes on your behalf.
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