Edited version of your private ruling

Authorisation Number: 1012537790920

Ruling

Subject: Backdating of cancellation of GST registration

Questions

Can the GST registration of the trust be backdated to 1 July 20XX?

(a) If so, must the trust refund the GST that was included in the price of supply to the recipient of the supply as of the date that the GST registration of the trust will be cancelled?

or

(b) Is the trust able to apply the amount of GST that it has collected from the ATO by lodging revised Business activity statements (BASs) against rent in arrears?

Answers

No, the GST registration of the trust cannot be backdated to 1 July 20XX. The registration can only be backdated to 1 July 20YY (which is a date that falls after 1 July 20XX).

a) No, the trust is not required to refund the GST that was included in the price of its supply to the recipient of the supply. However, the trust is required to remit the amount that it has received by lodging BASs, back to the ATO.

Please note that the trust must lodge a BAS for the June 20YY quarter. Please read below.

b) Not applicable.

Relevant facts and circumstances

The trust carries on an enterprise.

In June 20XX a letter was sent to the Australian Taxation Office (ATO) to request to cancel the GST registration of the trust with effect from 1 July 20XX as the annual turnover of the trust was below $75,000 (the registration turnover threshold).

As no correspondence in regards to the above mentioned request to cancel was received a handwritten note along with the January to March 20YY BAS was attached to cancel the registration as per the above request.

The trust stopped issuing tax invoices to the recipient as of 1 July 20YY. For this reason, it is assumed that the trust stopped holding themselves as a GST registered entity as of 1 July 20YY.

The recipients of the supply are registered for GST.

As the note attached to the March 20YY BAS was not acknowledged either, an officer of the trust called the ATO on in July 20YY about the above requests to cancel the GST registration of the trust. The officer was advised of the following by the ATO call centre staff:

· The GST registration of an entity can only be cancelled or revised once the revised BASs were finalised.

· The trust can backdate the GST cancellation to 1 July 20XX despite the fact that the trust has been issuing tax invoices to the tenants of the commercial properties and holding itself as a registered entity for GST purposes.

· The GST registration of an entity could be cancelled once revised BASs for the relevant period have been lodged.

· The GST registration can be cancelled over the phone or online at the ATO website.

· Notify the recipient of the supply that GST is not applicable to the rent with effect from 1 July 20XX.

· It is between the trust and the recipient whether the GST which would be claimed by the trust by lodging revised BASs is refunded or applied against consideration in arrears.

As per the above advice the trust:

· lodged revised BASs that were sent in by the ATO and consequently, the trust has received a refund from the ATO.

· applied for cancellation of the GST status of the trust in September 20YY and backdated the date of effect of the cancellation to 1 July 20XX as per advice of the ATO call centre staff.

The officer of the trust was not asked or prompted by the ATO call centre staff who assisted them with the cancellation of the GST registration as to when the entity (that is, the trust) stopped operating as a GST registered entity and thus the officer was not aware of requirements of when an entity was eligible to backdate their GST cancellation.

The officer has submitted that in the event the trust was not entitled to backdate its GST cancellation to 1 July 20XX, they are willing to refund any amounts that the trust has claimed through the revised BASs back to the ATO.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999, Section 25,

A New Tax System (Goods and Services Tax) Act 1999, Section 29-70 and

Taxation Administration Act 1953, Section 105-65.

Reasons for decisions

Backdating GST registration

Subsection 25-55(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

The Commissioner must cancel your *registration if:

a) you have applied for cancellation of registration in the *approved form; and

b) at the time you applied for cancellation of registration, you had been registered for at least 12 months; and

c) the Commissioner is satisfied that you are not *required to be registered.

Note: Refusing to cancel your registration under this subsection is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953).

(terms marked with an asterisk (*) are defined in section 195-1 of the GST Act)

Subsection 25-60(1) of the GST Act states:

(1) The Commissioner must decide the date on which the cancellation of your *registration under subsection 25-55(1) or (2) or section 25-57 takes effect. That date may be any day occurring before, on or after the day on which the Commissioner makes the decision.

Note: Deciding the date of effect of the cancellation of your registration is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953).

It is the current practice of the Commissioner that he will not cancel a registration from any date when the entity was operating on a GST-registered basis.

In this case, even though in June 20XX the trust intended to cancel its GST registration with effect from 1 July 20XX it continued to issue tax invoices to the tenants and held themselves as a GST registered entity until July 20YY. It is in July 20YY the trust may have stopped holding themselves as a GST registered entity and stopped issuing of tax invoices.

Accordingly, as the trust was operating on a GST registered basis until 30 June 201YYwhen it appears to have stopped operating on a GST registered basis, in accordance with the Commissioners current practice, the trust was not entitled to backdate it's registration to 1 July 20XX.

If the trust stopped operating as a GST registered entity as of 1 July 20YY, under section 25-60 of the GST Act, the Commissioner decides the date of effect of the GST cancellation as 1 July 20YY.

Accordingly, the relevant BASs need to be amended. The trust must also lodge the BAS for the June 20YY quarter.

Refunding of the GST amounts

As the trust is required to amend the BAS and refund the relevant amount to the ATO, there will be no amounts to be refunded to the recipient.

Please note the following additional information for the 1 July 20YY - September 20YY period.

Section 105-65 of the Taxation Administration Act 1953 (TAA) would normally apply where an entity has already paid an amount to the Commissioner.

Subsection 105-65 of the TAA, states the following:

(1) The Commissioner need not give you a refund of an amount to which this section applies, or apply (under Division 3 or 3A of Part IIB) an amount to which this section applies, if:

(a) you overpaid the amount, or the amount was not refunded to you, because a *supply was treated as a *taxable supply, or an *arrangement was treated as giving rise to a taxable supply, to any extent; and

(b) the supply is not a taxable supply, or the arrangement does not give rise to a taxable supply, to that extent (for example, because it is *GST-free); and

(c) one of the following applies:

(i) the Commissioner is not satisfied that you have reimbursed a corresponding amount to the recipient of the supply or (in the case of an arrangement treated as giving rise to a taxable supply) to an entity treated as the recipient;

(ii) the recipient of the supply, or (in the case of an arrangement treated as giving rise to a taxable supply) the entity treated as the recipient, is *registered or *required to be registered.

Furthermore, subsection 105-65(2) of the TAA states:

(a) in the case of a *supply:

(i) so much of any *assessed net amount or amount of *GST as you have overpaid (as mentioned in paragraph (1)(a)); or

(ii) so much of any assessed net amount that is payable to you under section 35-5 of the *GST Act as the Commissioner has not refunded to you (as mentioned in paragraph (1)(a)), either by paying it to you or by applying it under Division 3 of Part IIB of this Act;

Accordingly, under subsection 105-65(1) of the TAA the Commissioner need not give the trust a refund for any overpayments of GST as a consequence of cancelling it's registration with effect from 1 July 20YY for any subsequent periods.

However, as the trust had not held it self as a registered entity as of 1 July 20YY, and has not lodged BASs for the above period and therefore not revised any BASs for that period, there is no amount that has been 'overpaid' for section 105-65 of the TAA to apply.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).