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Edited version of private ruling
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Ruling
Subject: GST and option 3
QUESTIONS AT ISSUE:
Can you change your goods and services tax (GST) reporting from option 3 (GST instalments) to option 1 (report and pay actual GST amounts quarterly) with effect from 1 July 2010?
FACTS:
You are registered for GST.
You elected to pay GST by instalments for the financial year beginning 1 July 2010.
Your annual turnover is below $2 million.
You are not in a net refund position.
You wrote to us post 28 October 2010 informing that it is your desire to maintain option 1.
You have lodged your second quarter business activity statement (BAS).
DECISION:
No, you cannot change your GST reporting from option 3 to option 1 with effect from 1 July 2010. The Commissioner of Taxation has no discretion to allow you to make the change.
However, you can change your GST reporting from option 3 to option 1 with effect from 1 July 2011.
REASONS FOR DECISION:
You elected under subsection 162-15(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to pay GST by instalments.
Paragraph 162-30(1)(a) of the GST Act provides among other things, that your election ceases to have effect if you revoke it, by notifying the Commissioner in the approved form.
Paragraph 162-30(2)(b) of the GST Act provides that a revocation of your election is taken to have effect, or has, effect if you notify the Commissioner after 28 October in a financial year from the start of the next financial year.
In your case, you have notified the Commissioner after 28 October 2010. As the notification is after 28 October 2010, the revocation of your election is taken to have effect from the start of the next financial year, which is 1 July 2011.
Your request to backdate your revocation to 1 July 2010 cannot be granted as the Commissioner of Taxation is not given any discretion under Division 162 of the GST Act or any other provision of the GST Act to do so.
Additional Information
Where the GST instalment rate notified to you by the Commissioner is no longer appropriate for you, you may vary the instalment amount. This is available to ensure that the GST instalment system allows flexibility for taxpayers whose circumstances change during the financial year and for whom the instalment determined by the Commissioner is inappropriate.
Varying instalment amounts is allowed for in section 162-140 of the GST Act and is also explained in the enclosed Fact Sheet under the heading Varying your GST instalments.
If you do vary your GST instalment amount and the total of your instalments, or the estimate you use to work out your instalment for a quarter, is less than 85% of your actual GST liability for the financial year, you may incur a penalty.
The Tax Office Fact Sheet titled Quarterly GST options is enclosed for your reference. This Fact Sheet provides additional guidance on the application of Division 162 of the GST Act.