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Ruling

Subject: GST and annual tax periods

Question :

Can you change your GST tax periods from quarterly to annually effective from the date of your registration?

Answer:

Yes, you can change your GST tax periods to annually effective from the date of your registration.

Relevant facts

You are registered for goods and services tax (GST).

You registered for GST effective November 200A.

You advised that when you applied for registration you incorrectly recorded your GST turnover as over $75,000. You also incorrectly elected to report GST on a quarterly basis.

In December 200A, you wrote to us asking us to allow you to change your election to report GST annually.

Your current and projected GST turnover is less than $75,000.

You are not a member of a GST group.

You do not carry on any part of your enterprise overseas.

You have not already elected to pay GST by instalments.

Our system records show that the GST return for the quarter ending December 200A has been despatched with a due date for lodgment on 28 February 200B.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 subsection 151-5(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 151-10(2)

A New Tax System (Goods and Services Tax) Act 1999 subsection 151-20(3)

Reasons for decision

Summary

You can change your GST tax periods from quarterly to annually effective from the date of your registration.

Detailed reasoning

Subsection 151-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you can elect to report GST annually if:

· you are not required to register for GST and

· you have not already made an election to report your GST by instalments.

However, subsection 151-5(2) of the GST Act provides that you are not eligible to make an annual tax period election if the only reason you are not required to be registered for GST is because you disregarded supplies of rights or options offshore.

Under section 23-5 of the GST Act, you are required to be registered if you are carrying on an enterprise and your GST turnover meets the registration turnover threshold of $75,000 (or $150,000 if you are a non-profit body).

In your case, you have advised that you are not required to be registered for GST as your current and projected GST turnover is below the registration turnover threshold of $75,000. In addition, you have not made an election to pay your GST by instalments. Accordingly subsection 151-5(1) of the GST Act is satisfied.

Furthermore, subsection 151-5(2) of the GST Act does not apply to you as your supplies are not about rights or options offshore.

As the requirements of section 151-5 of the GST Act are met, you are eligible to make an annual tax period election.

When you must make your annual tax period election

Under paragraph 151-20(a) of the GST Act, where the tax periods applying to you are quarterly, you must make your annual tax election on or before 28 October in the financial year to which it relates.

However, under paragraph 151-20(2)(a) of the GST Act, if you are newly registered for GST, you may elect after the above date if you make your election within six months from the date of your GST registration, and your current GST lodgement record is not more than 6 months.

In your case, you are a new GST registrant. You advised that when you applied for registration you incorrectly chose quarterly tax periods. You wrote to the ATO in December 200A asking to report your GST on an annual basis from the date of your GST registration, which is November 200A. You have therefore made your election to pay GST annually within six months from the date of your GST registration. Accordingly, your election for an annual tax period is made within the period allowed in paragraph 151-20(2)(a) of the GST Act.

Date of effect

Subsection 151-10(2) of the GST Act provides that the date of effect of your election is either:

· the start date of the earliest tax period for which, on the day on which you make your election, your GST return is not yet due, or

· the start of such other tax period as the Commissioner of Taxation (Commissioner) allows, in accordance with a request you make in the approved form.

The Tax Office has dispatched to you the activity statement for the quarter ended 31 December 200A and you have not lodged it. Therefore, in accordance with subsection 151-10(2) of the GST Act, the Commissioner will allow you to report your GST on an annual basis from the date of your GST registration.

Duration of the election

Section 151-25 of the GST Act provides that your election ceases to have effect if:

· it is revoked by you notifying the Commissioner in the approved form

· the Commissioner disallows the election, or

· on 31 July in a financial year, you become required to be registered.

For more information on reporting GST annually, refer to the fact sheet Report your GST once a year which is available at www.ato.gov.au

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