ATO ID 2002/492: GST and grouping of companies when an individual has 100 per cent ownership of each company
Date of decision: 14 December 2001
Business line: Indirect Tax

Issue
Do the entities, companies A, B and C, satisfy the membership requirements of a GST group under section 48-10 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when an individual has 100% ownership of each company?

Decision
No, the entities do not satisfy the membership requirements of a GST group under section 48-10 of the GST Act when an individual has 100% ownership of each company.

Facts
The entities are companies A, B and C. An individual has 100% ownership of these companies. Companies A, B and C, therefore, do not have any ownership interests in each other. All of the companies are registered for goods and services tax (GST).

Reasons for decision
Summary: Section 48-5 of the GST Act sets out the requirements that must be satisfied for two or more entities to form a GST group. Paragraph 48-5(1)(a) of the GST Act requires that each of the entities must satisfy the membership requirements for that GST group. The membership requirements of a GST group are set out in section 48-10 of the GST Act. Under paragraph 48-10(1)(b) of the GST Act, to be a member of a GST group that contains other companies, a company must be part of the same 90% owned group as all the other companies in the proposed GST group. Division 190 of the GST Act defines the term '90% owned group'. According to section 190-1 of the GST Act, two companies are members of the same 90% owned group if: In this case, an individual has 100% direct ownership of each of the companies. Companies A, B and C do not have any ownership interests in each other. As none of the companies have any ownership interests in each other, they are not part of the same 90% owned group. Therefore, companies A, B and C, do not satisfy the membership requirements of a GST group under section 48-10 of the GST Act, where an individual has 100% ownership of each company.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 48-5 paragraph 48-5(1)(a) section 48-10 paragraph 48-10(1)(b) Division 190 section 190-1
Subject references: Goods & services tax GST special rules GST groups