ATO ID 2003/1179: GST and date of effect to account on a cash basis
Date of decision: 6 August 2003
Business line: Indirect Tax

Issue
Can the date of effect of the choice by an entity to account on a cash basis, under subsection 29-40(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), be the first day of a tax period that has ended before the choice is made?

Decision
No, the date of effect of the choice by an entity to account on a cash basis under subsection 29-40(1) of the GST Act cannot be the first day of a tax period that has ended before the choice is made.

Facts
The entity is a business operator that is registered for goods and services tax (GST) and accounts for GST on a non-cash basis. The entity satisfies at least one of the requirements under section 29-40(1) of the GST Act that allows an entity to choose to account on a cash basis. The entity made a choice to account on a cash basis and requested that the date of effect be the first day of a tax period that ended before the entity made its choice.

Reasons for decision
Summary: Subsection 29-40(1) of the GST Act provides that where certain requirements are met, an entity can choose to account on a cash basis with effect from the first day of the tax period that the entity chooses. The Commissioner considers that the date of effect is the first day of the tax period during which the entity makes its choice or the first day of any subsequent tax period. However, the date of effect cannot be the first day of a tax period that has ended before the entity made its choice.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 29-40(1)
Subject references: Goods and services tax GST tax periods Cash basis Non cash basis