ATO ID 2011/30: GST: revocation of approval of membership in a GST group of a company that goes into liquidation on or after 4 December 2009
Date of decision: 17 June 2010
Business line: Indirect Tax

Issue
Will the entity, a member of a GST group, have its GST group membership approval revoked by the Commissioner under subsection 48-70(2) of the A New Tax System (Goods and Services) Act 1999 (GST Act) when the entity and no other GST group member goes into liquidation, on or after 4 December 2009, and the representative member of the GST group makes no election under subsection 48-73(1) of the GST Act?

Decision
Yes, the entity will have its GST group membership revoked by the Commissioner under subsection 48-70(2) of the GST Act when the entity and no other GST group member goes into liquidation, on or after 4 December 2009, and the representative member of the GST group makes no election under subsection 48-73(1) of the GST Act.

Facts
The entity is a member of a GST group. The entity goes into liquidation on or after 4 December 2009 and on a date that is not the first day of the GST group's tax period. The entity is the only member of the GST group that goes into liquidation. The representative member of the GST group does not make an election under subsection 48-73(1) of the GST Act for the tax period of each group member to cease at the same time as the tax period of the group member that goes into liquidation.

Reasons for decision
Summary: Under subsection 48-70(2) of the GST Act, the Commissioner must revoke the approval of one of the members of a GST group if satisfied that the member does not satisfy the membership requirements for the GST group. Section 48-10 of the GST Act sets out the membership requirements for GST groups. One of the membership requirements that must be satisfied is that a group member must have the same tax periods applying to it as the tax periods applying to all the other members of the GST group (paragraph 48-10(1)(d) of the GST Act). Effective from 4 December 2009, subsection 27-39(1) of the GST Act provides that where an entity becomes an incapacitated entity (which includes an entity in liquidation), the entity's tax period at the time is taken to have ended at the end of the day before the entity becomes incapacitated. The entity becomes incapacitated, and as such, its tax period at the time is taken to have ended at the end of the day before it becomes incapacitated. Therefore, the entity does not continue to have the same tax periods as the other members of the GST group and does not satisfy the membership requirements for GST groups as set out in section 48-10 of the GST Act. Therefore, the approval of the entity's GST group membership must be revoked under subsection 48-70(2) of the GST Act.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 subsection 27-39(1) section 48-10 paragraph 48-10(1)(d) subsection 48-70(2) paragraph 48-70(1)(b) subsection 48-70(1A) subsection 48-73(1)
Related ATO interpretative decisions: ATO ID 2004/693 | - for date of effect of revocation | ATO ID 2004/676 | - for liquidations occurring prior to 4 December 2009
Subject references: Goods and services tax GST special rules GST groups