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Ruling

Subject: GST instalment elections

Question:

Are you eligible to elect to pay goods and services (GST) by instalment?

Answer:

Yes.

Relevant facts:

You are registered for GST.

You report GST quarterly.

Your September quarterly activity statement does not have option 3 (GST instalment).

You have used GST instalment method in previous years.

You were not provided the GST instalment in your September quarterly activity statements because of late lodgements of your previous activity statements.

You advised that you were affected by natural disaster.

You also advised that you sold a real property recently and as a result, your current GST turnover exceeded $2 million.

You advised that your projected GST turnover is less than $2 million.

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

You are not in a net refund position.

You have lodged all outstanding activity statements.

You have an acceptable tax compliance history.

You have made an election to pay GST by instalment, in an approved form, before 28 October.

Reasons for decision:

An entity may make an election to pay GST by instalments if it satisfies the requirements set out in section 162-5 of the GST Act and is eligible to pay GST by instalment. The election is generally required to be made by 28 October of the relevant financial year.

You made an election to pay GST by instalment in an approved form before 28 October. To reinstate your election, we need to consider whether you satisfy the criteria set out in section 162-5 of the GST Act.

Eligibility

The criteria set out in section 162-5 of the GST Act are as follows:

The entity must:

o 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

o not report and pay GST monthly

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

o complied with all their obligations to give GST returns to the Commissioner, and

o not be in a net refund position

In your case you have previously used GST instalment method to pay your GST. However, owing to late lodgements of some of your previous activity statements, you were not given the GST instalment option in your current September activity statement.

You advised that the reason for lodging some of your previous activity statements late was because you were affected by natural disaster. Since then you have an acceptable compliance history.

The recent sale of the real property has affected your current GST turnover. However, you advised your projected GST turnover is less than $2 million.

Small Business entity

An entity is a small business if it carries on a business and its GST turnover is less than $2 million.

Paragraph 162-5(2)(a) of the GST Act provides that the current instalment turnover threshold is $2 million

GST turnover

Under subsection 188-10(1) of the GST Act, an entity's GST turnover meets instalment turnover threshold if:

· the current GST turnover is at or above the turnover threshold and the Commissioner is not satisfied the entity's projected turnover is below the turnover threshold; or

· the entity's projected turnover is at or above turnover threshold.

The current GST turnover is defined in section 188-15 of the GST Act as being at a time during a particular month as the sum of values of your supplies you have made or are likely to make during the 12 months ending at the end of that month. In this case your current GST turnover exceeds $2 million.

The projected GST turnover is defined in section 188-20 of the GST Act as being at a time during a particular month as the sum of values of your supplies that you have made or are likely to make during the current month and the next 11 months. You have advised that your projected turnover is less than $2 million.

Therefore, although your current GST turnover exceeds $2 million, the Commissioner is not satisfied that your projected GST turnover exceeds the instalment turnover threshold. Your GST turnover under subsection 188-10(1) of the GST Act is less than $2 million, the instalment turnover threshold

Based on the information provided you have satisfied all the requirements of section 162-5 of the GST Act and are eligible to elect to pay GST by instalments for the financial year.