Wednesday, February 21, 2018
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FAQs - GST Registration

A taxpayer has two small businesses, each with an annual turnover of $30,000. As the turnover of each small business is under $75,000, does he or she have to register for GST?

Yes. If your total (or projected) annual turnover from all businesses is $75,000 or more, you must register for the GST. You do not look at each business in isolation. In terms of completing the BAS, the details of both businesses are consolidated by the entity.

Last Updated on Thursday, 22 August 2013 04:34

Can GST registration be cancelled within 12 months of being registered?

 Yes - a new law allows the ATO to cancel voluntary registration from as early as 1 July 2000, subject to certain conditions.

Last Updated on Thursday, 22 August 2013 04:35

A taxpayer must conduct an "enterprise" to be able to register for GST. What are the current "enterprise" tests?

 For GST purposes, you must demonstrate that you are conducting the activity in the "form of business", with a reasonable expectation of profit or gain, and that the activity is not a private recreational pursuit or hobby. This is especially important for those who wish to claim GST paid in relation to a horse breeding activity (and also those who wish to claim income losses for horse breeding activities).

The ATO has a number of tests to determine whether an entity is engaged in a viable business enterprise. Some of the more important criteria include:

  • whether the activity has a significant commercial purpose or character;
  • whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity;
  • whether there is repetition and regularity of the activity;
  • whether the activity is of the same kind and carried on in a businesslike manner such that it is directed at making a profit;
  • the size, scale and permanency of the activity;
  • the keeping of proper records;
  • the existence of a Business Plan evidencing viability;
  • are the goods and services being regularly sold in order to generate a profit; and
  • the use of experts and consultants.
Last Updated on Thursday, 22 August 2013 04:36

A taxpayer in business acquires an ABN, but due to turnover and projected turnover being less than $75,000, chose not to register for GST. If that taxpayer turnover subsequently exceeds $75,000, must he or she register for GST immediately? Is GST payable

The taxpayer must immediately register for GST when sales exceed $75,000. GST is payable on the sale proceeds and tax credits can be claimed only from the date of registration.

Many small businesses will be caught out by this requirement. Accordingly, I strongly suggest that registration take place well in advance of the turnover exceeding $75,000 - at least 10% GST can be added to the sale prices and the taxpayer will not be "out of pocket" for 1/11th of the sale proceeds.

Last Updated on Thursday, 22 August 2013 04:37

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