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Edited version of private advice
Authorisation Number: 1012632932211
Ruling
Subject: GST liability
Question:
Will the Commissioner disregard your goods and services tax (GST) liability for the previous income years and allow you to pay your GST liability only for the last two income years?
Decision:
No, the Commissioner does not have the authority to disregard any part of your GST liability. You have an obligation to remit your outstanding GST liability to the ATO.
Relevant facts and circumstances
• You operate a website, through which you offer different web based services. The absolute majority of your clients are from overseas countries and only a small minority are from Australia.
• You were aware that your web based services to overseas clients are not subject to GST. As the income derived from Australian clients for a year was less than $75,000, you did not register for GST and did not charge GST on such services.
• Recently, you received a letter from the ATO informing you that you are retrospectively registered for GST effective from 1 July 20XX. There was no tax audit on you. However, you have found out that the ATO has inquired from your accountant.
• As per our system, you are registered for GST effective from 1 July 20XX under the quarterly lodgment cycle.
• In your letter you have calculated and quoted the notional GST owed by you for each income year since your registration.
• You want the Commissioner to disregard the GST payable for taxable supplies made during previous income years and accept only the GST payable for taxable supplies made during the last two income years. That will make your tax debt manageable.
• You assure that you have changed your processes and charge GST on your taxable supplies. You will lodge all future business activity statements (BAS) and pay GST on time.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 - section 9-5
A New Tax System (Goods and Services Tax) Act 1999 - section 9-40
Reasons for the decision
Under section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), you must pay the GST payable on any taxable supply that you make.
Section 9-40 of the GST Act applies irrespective of whether you have charged the GST liability to your clients or not. Section 9-5 of the GST Act explains when you make taxable supplies.
When you make a taxable supply, you incur a corresponding GST liability and you have an obligation to remit the relevant GST amount to the ATO. There is no provision in the GST Act, which allows the Commissioner to disregard any part of your GST liability. Therefore, you have an obligation to pay any outstanding GST liability. It is important that you lodge your quarterly BAS on time, even if you are unable to pay your GST liability by the due date.
If you experience difficulties in paying your GST liability after you have lodged your BAS, you should contact the ATO Account Management Info Line on 13 11 42 to discuss your circumstances and what options are available to you.