Edited version of private ruling

Authorisation Number: 1011765082610

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Ruling

Subject: option 3

Question:

Why were you temporarily removed from instalment Option 3 for Business Activity Statement (BAS) reporting?

Answer:

At the time the 1 July to 30 September 2010 BAS was generated, the last return given to the commissioner being 1 July 2008 to 30June 2009 was in a net refund position. You are not eligible to report using Option 3 if you are in a GST net refund position.

However since your recent correspondence your 1 July 2009 to 30 June 2010 return has been lodged and you are no longer in a net refund position, therefore Option 3 now applies to the BAS lodgement for the current financial year. Your 1 July 2010 to 30 September quarter 2010 and 1 October 2010 to 31 December quarter 2010 BAS are now lodged and up to date.

Relevant facts:

You are registered for Goods and Services Tax (GST).

The BAS that was sent to you in respect of the period 1 July 2010 to 30 September 2010 (September quarter) did not offer Option 3 (pay GST instalment amount quarterly).

Your GST turnover is $2 million or less.

You report GST quarterly.

You have lodged activity statements that cover at least a four month period.

You were in a net refund position in the last return given to the ATO, 1 July 2008 to 30 June 2009.

You have lodged all activity statements that are required to be lodged.

You wrote to us on 12 January 2011 in response to our overdue BAS notice of 8 January 2011, we confirm that we have no record of your letter.

We confirm that we dispatched a 1 July 2010 to 30 September quarter 2010 BAS to you on 12 September 2010, you advise that you did not receive this. You have subsequently lodged a replacement BAS for this period. The 1 October 2010 to 31 December quarter 2010 BAS was dispatched to you on 28 November 2010, you advise that you did not receive this BAS either, you have subsequently lodged a replacement BAS for this period.

Relevant legislative provisions:

A New Tax System (Goods and Services Tax) Act 1999 Section 162-5

A New Tax System (Goods and Services Tax) Act 1999 Subsection 162-25(3)

A New Tax System (Goods and Services Tax) Act 1999 Section 162-30

Reasons for decision:

To be eligible to elect to pay GST by instalments an entity must:

· be a small business with an annual turnover (including the turnover of any related entities) of less than $2 million, or, be an enterprise (other than a business) with a GST turnover of $2 million or less

· not report and pay GST monthly

· have lodged activity statements that cover at least a four month period

· not have any outstanding overdue activity statements, and

· not be in a net refund position.

A GST net refund position means that your total GST credits were more than the total GST payable on your previous activity statements.

At the commencement of the 1 July 2010 to 30 June 2011 financial year our records indicated that you were in a net refund position and therefore ineligible to pay GST by instalments. When you lodged your annual return on 30 November 2010 our records were brought up to date to reflect that you were no longer in a net refund position. At this point your eligibility to continue paying GST by instalments was confirmed.