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Edited version of private ruling
Authorisation Number: 1011757635365
Ruling
Subject: late election to opt out of option 3
Question:
Can you change your Goods and Services Tax (GST) reporting option from reporting annually and paying by instalments (Option 3) to reporting and paying quarterly (Option 1) during the current financial year?
Answers:
No. You cannot change your reporting option from Option 3 to Option 1 during the current financial year. The Commissioner of Taxation (Commissioner) has no discretion to allow a taxpayer to withdraw from the GST instalment system and use a different reporting option during the current financial year.
Relevant facts:
You are registered for Goods and Services Tax (GST).
You have elected to use the instalment option for payment of your GST obligations in your September 2010 quarterly activity statement.
You have written to the Australian Taxation Office (ATO) and requested that you opt out of option 3 reporting. The letter was received by the tax office on 28 February 2011.
You have requested that you change your reporting from option 3 to option 1 in order to claim your input tax credits on a purchases made during the 1 October 2010 to 31 December 2010 tax period.
Relevant legislative provisions:
A New Tax System (Goods and Services Tax) Act 1999 Section 162
A New Tax System (Goods and Services Tax) Act 1999 Section 162-30(2)
Reasons for decision
Detailed reasoning
An entity that meets the eligibility requirements of section 162-5 of the A New Tax System (Goods and Services) Tax Act 1999 (GST Act) is able to elect to pay their GST by instalments (Option 3). You have made such an election in your September 2010 quarterly activity statement which has been accepted by the Commissioner.
Under subsection 162-30(2) of the GST Act, you are able to revoke your Option 3 election at any time. However, the date of effect of the revocation will take effect from the start of the current financial year only where it is made on or before 28 October of that year. Otherwise, the date of effect of the revocation will be the start of the next financial year if the revocation is made after the 28 October.
In your case, you have not notified the Commissioner that you wanted to revoke your Option 3 election on or before 28 October 2010. The written request submitted by you to the ATO was dated 28 February 2011.
Your request to revoke your election during this financial year cannot be granted as Division 162 of the GST Act does not give the Commissioner any discretionary powers, even for reasons of hardship, to allow a revocation made after 28 October in the current year to take effect from a point in time other than the start of the next financial year.
You will need to contact the ATO prior to 28 October 2011 to opt out of Option 3 for the financial year 1 July 2011 30 June 2012.