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Edited version of your written advice
Authorisation Number: 1012732885342
Ruling
Subject: GST groups
Question 1
Is a separately identifiable part of the government entity eligible to register for goods and services tax (GST)?
Answer
Yes
Question 2
If the answer to question 1 is 'yes' and the government entity registers for GST can it be added to an existing GST group of government related entities?
Answer
Yes, as long as, when it registers for GST, it has the same tax periods applying to it and accounts on the same basis as the existing GST group of government related entities.
Question 3
If the answers to questions 1 and 2 are 'yes' and the government entity becomes a member of the new GST group will it be liable for GST in relation to supplies made to other GST group members?
Answer
No
Relevant facts and circumstances
As a result of a recent restructure there have been changes to certain arrangements.
A government entity has a separately identifiable part of it with its own accounting system. It wants that separate part to obtain an Australian business number, register for GST and be added to a different GST group.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999, section 48-40
A New Tax System (Goods and Services Tax) Act 1999, paragraph 48-70(1)(c)
A New Tax System (Goods and Services Tax) Act 1999, subsection 149-5(1)
A New Tax System (Goods and Services Tax) Act 1999, subsection 149-25
Australian Business Number) Act 1999, section 41
Reasons for decision
All legislative references in this ruling are to the A New Tax System (Goods and Services Tax) Act 1999 unless otherwise stated.
Question 1
A government entity may apply to be registered for GST even if it is not an entity and is not carrying on, or intending to carry on, an enterprise (section 149-5(1)).
Section 195-1 provides that the term 'government entity' has the meaning given by section 41 of the Australian Business Number) Act 1999 which states:
government entity means:
(a) a Department of State of the Commonwealth; or
(b) a Department of the Parliament established under the Parliamentary Service Act 1999; or
(c) an Executive Agency, or Statutory Agency, within the meaning of the Public Service Act 1999; or
(d) a Department of State of a State or Territory; or
(e) an organisation that:
(i) is not an entity; and
(ii) is either established by the Commonwealth, a State or a Territory (whether under a law or not) to carry on an *enterprise or established for a public purpose by an *Australian law; and
(iii) can be separately identified by reference to the nature of the activities carried on through the organisation or the location of the organisation;
whether or not the organisation is part of a Department or branch described in paragraph (a), (b), (c) or (d) or of another organisation of the kind described in this paragraph
We consider that the government entity satisfies the definition of government entity and as such, it can register for GST.
Question 2
Under section 149-25, a government related entity satisfies the membership requirements of a GST group if:
• it is registered for GST
• it is not a member of any other GST group
• it has the same tax periods applying to it and accounts on the same basis as the other members of the GST group, and
• the other members of the GST group are government related entities.
Section 195-1 provides that a 'government related entity' includes a 'government entity' and, as previously determined, the government entity satisfies the definition of government entity but it is not currently registered for GST.
However, on the information provided, the government entity will satisfy the membership requirements in section 149-25 where, after registering for GST, it has the same tax periods applying to it and accounts on the same basis as the other members of the new GST group which are all government related entities.
Question 3
A supply that an entity makes to another member of the same GST group is treated as if it were not a taxable supply unless it is a taxable supply because of Division 84 or the entity is a participant in a GST joint venture and acquired the thing supplied from the joint venture operator for the joint venture (paragraph 48-40(2)(a)).
On the facts provided, when the government entity is added to the new GST group, intra-group transactions, such as supplies that it makes to other members of that GST group, will not be treated as taxable supplies. Consequently, the government entity will not be liable for GST in relation to these supplies.
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