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Edited version of your private ruling
Authorisation Number: 1012465658568
Ruling
Subject: GST and required to register when the turnover threshold is exceeded
Question
Are you required to register for goods and services tax (GST) when you have exceeded the GST turnover threshold for the financial year ending on 30 June 20XX?
Answer
Yes, you are required to register for GST when you have exceeded the GST turnover threshold for the financial year ending on 30 June 20XX.
Relevant facts and circumstances
· You are carrying on an enterprise.
· You registered for goods and services tax (GST) on 1 July 20YY and cancelled the registration in late 20ZZ.
· You cancelled your GST registration as your income was less than the GST turnover threshold.
· Your GST turnover has exceeded the threshold of $75,000 in the year ending on 30 June 20XX.
· Tax Office has contacted your tax agent to notify that you have exceeded the GST turnover threshold for the year ending on 30 June 20XX.
· You believed that you are not required to register for GST for the year ending on 30 June 20XX as you have unexpectedly exceeded the GST turnover threshold.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 - section 23-5
A New Tax System (Goods and Services Tax) Act 1999 - subsection 23-15(1)
A New Tax System (Goods and Services Tax) Act 1999 - section 25-1
A New Tax System (Goods and Services Tax) Act 1999 - section 188-10
Reasons for decision
Section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) explains that you are required to be registered if you are carrying on an enterprise and your annual turnover meets the registration turnover threshold.
According to subsection 23-15(1) of the GST Act, the registration turnover threshold is $75,000 unless you are a non-profit body.
Section 25-1 of the GST Act states:
You must apply, in the *approved form, to be *registered under this Act if:
(a) you are not registered under this Act; and
(b) you are *required to be registered.
You must make your application within 21 days after becoming required to be registered.
*Denotes a term defined in section 195-1 of the GST Act.
If you are not registered for GST, you must check each month to see whether you have reached the GST turnover threshold. If you reached the threshold, you must register for GST within 21 days.
The concept of annual turnover is discussed in Division 188 of the GST Act. Specifically, section 188-10 of the GST Act describes when you will meet the registration turnover threshold in terms of either your current annual turnover or projected annual turnover.
Guide for small business - 'GST for small business'; Nat 3014-05.2012 explains that you reach the GST turnover threshold if either your turnover for the current month and the previous 11 months is $75,000 or more or; your turnover for the current month and the next 11 months is likely to be $75,000 or more.
This means that if for a 12 month period, your annual turnover exceeds the registration turnover threshold of $75,000, and you have not registered for GST, then the Commissioner must register you for GST and decide that your registration becomes effective at the commencement of the 12 month period that your annual turnover exceeds the threshold.
In this case, the Tax Office contacted your tax agent to notify you the requirement to register for GST for the financial year ending on 30 June 20XX as you have exceeded the GST annual turnover threshold. You were registered for GST and cancelled your registration in late 20ZZ as you were not expecting the level of income required to be registered for GST. It is your responsibility to check each month to ensure whether your annual income will exceed the GST turnover threshold and to register for GST within 21 days.
Therefore, you are required to register for GST immediately for the financial year ending on 30 June 20XX by visiting www.business.gov.au or contacting the Tax Office on 13 28 66 to obtain the appropriate form to register or by seeking advice from your tax agent.
Please note that if you do not register for GST and you are required to do so, you may have to pay GST on the sales you have made during the financial year ending on 30 June 20XX or since the date you became required to register for GST even if you did not include GST in the price of those sales. You may also be liable to pay penalties and interest.
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