Max Newnham -Sep 29, 2014
When the GST system was introduced businesses that earned more than $50,000 a year had to register for the new system, while other businesses with income of less than this could choose to register. This income registration level was increased to $75,000 a year some years ago. Once a business is registered for the GST system their obligations for reporting continue as long as they remain registered.
Q. I have not claimed GST since December 2012 due to having a lot of time off through lack of work. I have earned well below $75,000 a year for the 2013 and 2014 financial years. I just received a reminder from the ATO saying that I need to lodge a BAS statement. Because I earn less than the $75,000 a year do I need to lodge the BAS?
A. Unfortunately it does not matter whether your income dropped below the $75,000 registration level for the 2013 and 2014 years. Your obligation to prepare and lodge quarterly BAS statements still remains the same, as long as you are registered.
What you have not made clear in your question is whether any invoices issued for work done since December 2012 included GST. Although you may not have been claiming GST paid by you it does not affect your requirement to include GST on any invoices that you have issued.
Once a business is registered for GST the requirement to collect and include this tax remains the same until the registration is cancelled. Registration can be cancelled if the business ceases or it is sold. There is a requirement that a business
must cancel its GST registration within 21 days of the business ceasing or being sold.
GST registration can also be cancelled when the income level drops below the $75,000 income limit. The only times that a business cannot cancel the GST registration in this situation is when:
· the business is operated by an individual that is a taxi driver,
· the individual registered represents someone who is a bankrupt and is required to be registered for GST,
· the business is in liquidation and is registered for GST, or
· the individuals an Australian resident who acts as an agent for a non-resident that is registered or required to be registered for GST.
When cancelling a GST registration the business owner can choose the date that the cancellation will apply from. However a date cannot be chosen retrospectively if the business has still been operating on a GST registered basis after that date.
This means you have two options open to you depending on what has happened since December 2012. If you can demonstrate to the ATO that you have not been issuing tax invoices since December and therefore collecting GST you could possibly apply to have your GST registration cancelled from December 2012.
If you have still been issuing tax invoices this would mean that GST would have been included in your income, you could not backdate the cancellation of your GST registration, and you would need to lodge the outstanding BAS forms.
Questions on small business and tax issues can be emailed to firstname.lastname@example.org
Max Newnham is the founder of the website www.smsfsurvivalcentre.com.au.