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Edited version of private advice
Authorisation Number: 1052034160826
Date of advice: 15 September 2022
Ruling
Subject: GST registration
Question 1
Are you required to be registered for GST under section 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, you are not required to be registered for GST if you current or projected GST turnover does not exceed the $75,000 threshold.
Question 2
If a separate Trust is set up, are they required to be registered for GST under section 23-5 GST Act?
Answer
No, once the Trust is set up, they will not be required to be registered for GST if the Trust's current or projected GST turnover does not exceed the $75,000 threshold.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
The date this ruling is issued.
Relevant facts and circumstances
You are an individual but are not registered for the goods and services tax (GST).
• You carry on an enterprise of beauty service/retail business.
• You have an expected turnover of $XX
• You have a shopfront where you make general offers to the public.
• You advertise your services through Facebook/Instagram.
• You have purchased a hair removal machine.
You want to set up a separate Trust
• The Trust will operate the laser hair removal part of the business.
• You expect the Trust to have an expected turnover of $XX.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 section 9-20.
A New Tax System (Goods and Services Tax) Act 1999 section 23-5.
A New Tax System (Goods and Services Tax) Act 1999 section 188-5.
A New Tax System (Goods and Services Tax) Act 1999 section 188-10.
A New Tax System (Goods and Services Tax) Act 1999 section 188-15.
A New Tax System (Goods and Services Tax) Act 1999 section 188-20.
Reasons for decision
Section 23-5 of the GST Act 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.
The term 'enterprise' is defined in section 9-20 of the GST Act and includes an activity, or series of activities, done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property.
In your case, you are operating a beauty service/retail business. This activity falls within the scope of an 'enterprise' for GST purposes and as such paragraph 23-5(a) of the GST Act is satisfied.
The next issue to consider is whether your GST turnover meets the registration turnover threshold (currently $75,000, or $150,000 for non-profit bodies).
The meaning of GST turnover is contained in Division 188 of the GST Act. Subsection 188-10(1) of the GST Act provides that your GST turnover will meet 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.
Your 'current GST turnover' is defined in section 188-15 of the GST Act as the sum of the values of all of your supplies made in a particular month and the preceding 11 months.
Your 'projected GST turnover' is defined in section 188-20 of the GST Act as the sum of the values of all of your supplies made in a particular month and the following 11 months.
Therefore, if the sole trader's 'current GST turnover' or 'projected turnover' does not exceed $75,000, they will not be required to be registered for GST.
However, if the sole traders GST turnover is less than the registration turnover threshold of $75,000, they can choose to register for GST if the taxpayer is carrying on an enterprise under section 23-10 of the GST Act.
Question 2
Section 23-5 of the GST Act 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.
The term 'enterprise' is defined in section 9-20 of the GST Act and includes an activity, or series of activities, done on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property.
The Trust is purporting to operate a laser hair removal business. This activity falls within the scope of an 'enterprise' for GST purposes and as such paragraph 23-5(a) of the GST Act is satisfied.
The next issue to consider is whether your GST turnover meets the registration turnover threshold (currently $75,000, or $150,000 for non-profit bodies).
The meaning of GST turnover is contained in Division 188 of the GST Act. Subsection 188-10(1) of the GST Act provides that your GST turnover will meet 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.
Your 'current GST turnover' is defined in section 188-15 of the GST Act as the sum of the values of all of your supplies made in a particular month and the preceding 11 months.
Your 'projected GST turnover' is defined in section 188-20 of the GST Act as the sum of the values of all of your supplies made in a particular month and the following 11 months.
Therefore, if the Trust's 'current GST turnover' or 'projected turnover' does not exceed $75,000, they will not be required to be registered for GST.
However, if the Trust's GST turnover is less than the registration turnover threshold of $75,000, they can choose to register for GST if they are carrying on an enterprise under section 23-10 of the GST Act.