Edited version of private advice

Authorisation Number: 1051805195292

Date of advice: 12 February 2021

Ruling

Subject: GST and cancellation of registration

Question

Is the Commissioner satisfied that you are not required to be registered pursuant to section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the purpose of cancelling your GST registration?

Answer

Yes

This ruling applies for the following period:

1 January 20XX - 31 December 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are registered for GST effective from dd/mm/yyyy.

You are the registered proprietor of land being certificate of title folio identifier xx/xxxxxx (the Property).

You acquired the Property on dd/mm/yyyy.

The Property is mostly vacant land and has been utilised for agricultural and agistment purposes.

You have used the Property for market gardening and plantation purposes since you registered for GST. These activities ceased around yyyy.

The Property is currently leased to a tenant who run livestock on the Property.

A commercial lease (Lease) is in place between you and the third party. The permitted uses of the Property under the Lease are sheep production/breeding, crop production and market gardening.

The fixed term Lease expired on dd/mm/yyyy however the Lease has continued on a periodic basis. The rent is $x,xxx per annum (GST inclusive).

Your GST-inclusive revenue since the yyyy financial year has not exceeded $x,xxx per annum.

You have not derived income other than from the Lease of the Property except for a compensation payment of $x,xxx in the yyyy financial year.

You have not incurred any expenditure since being registered for GST for which an input tax credit was claimed.

You are considering ceasing your leasing enterprise.

You do not hold any other assets and do not intend to acquire any income producing assets or derive revenue from any other activities.

You are seeking to cancel your GST registration with effect from dd/mm/yyyy, with your quarterly Business activity statement (BAS) ending dd/mm/yyyy being your final BAS.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 23-5

Paragraph 23-5(a)

Paragraph 23-5(b)

Subsection 25-55(1)

Subsection 25-60(1)

Subsection 188-10(1)

Section 188-15

Section 188-20

Reasons for decision

In this ruling,

•         unless otherwise stated, all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)

•         all legislative terms of the GST Act marked with an asterisk are defined in section 195-1 of the GST Act.

•         all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on the ATO website ato.gov.au

Subsection 25-55(1) provides that Commissioner must cancel your registration if:

(a)  you have applied for cancellation of registration in the approved form; and

(b)  at the time you applied for cancellation of registration, you had been registered for at least 12 months; and

(c)   the Commissioner is satisfied that you are not required to be registered.

You intend to make application to the Commissioner requesting cancellation of your GST registration effective from dd/mm/yyyy.

You have been registered for GST since dd/mm/yyyy. As such, as at the time you will make such application, you will have had been registered for at least 12 months.

Section 23-5 states that you are required to be registered for GST if:

(a)  you are carrying on an enterprise; and

(b)  your GST turnover meets the registration turnover threshold (currently $75,000 for entities other than non-profit bodies).

It is common ground that you are carrying on a leasing enterprise thus satisfying paragraph 23-5(a). As such, the next issue to consider is whether your GST turnover is $75,000 or more.

Subsection 188-10(1) provides that you have a GST turnover that meets the registration turnover threshold if:

(a)  your current GST turnover is at or above $75,000 and the Commissioner is not satisfied that your projected GST turnover is less than $75,000; or

(b)  your projected GST turnover is at or above $75,000.

'Current GST turnover' is defined in section 188-15 as the sum of the values of all of your supplies made in a particular month and the preceding 11 months.

'Projected GST turnover' is defined in section 188-20 as the sum of the values of all of your supplies made in a particular month and the following 11 months.

Given the facts in this case, both your 'current GST turnover' and 'projected GST turnover will not meet the registration turnover threshold of $75,000.

Consequently, you do satisfy paragraph 23-5(b) and are not required to be registered pursuant to section 23-5.

Other relevant comments

Date of effect of cancelling your GST registration

Subsection 25-60(1) provides that the Commissioner must decide the date at which the cancellation of your registration takes effect.

Practice Statement Law Administration PS LA 2011/8 The registration of entities sets out the policy and procedures to be followed on a range of issues relating to the registration of entities, including cancelling GST registration.

In respect to the date of effect of the cancellation of GST registration, paragraphs 82 and 83 of PS LA 2011/8 state:

82. The Commissioner will not cancel the registration with effect from a date on which the entity was required to be registered, and will not usually do so from any date when the entity was operating as if it were registered for GST.

83. When an entity that was required to be registered applies to cancel its registration, the Commissioner will ordinarily accept the cancellation date the entity chooses, provided that the entity:

-       was not required to be registered after that date

-       was entitled to be registered before that date

-       has been registered for 12 months, and

-       has at that date ceased operating on a GST-registered basis.

Furthermore, paragraph 86 of PS LA 2011/8 states:

86. The Commissioner will be satisfied that an entity has stopped operating (or never operated) on a GST-registered basis from a certain date if, from that date or an earlier date, the entity:

-       did not hold themselves out to other businesses as being registered for GST

-       did not issue any tax invoices or adjustment notes

-       did not claim any input tax credits, special transitional credits or indirect transitional credits, and

-       has made a declaration to the ATO that satisfies all of the above points.

You intend to request the cancellation of your GST registration take effect from dd/mm/yyyy. Therefore, in the situation you hold yourself out to be registered for GST from dd/mm/yyyy (such as include GST in the lease amount payable by the tenant or issue a tax invoice to the tenant for period/s commencing on or after dd/mm/yyyy) the Commissioner will not cancel your registration from dd/mm/yyyy and will decide a more appropriate date.