ATO ID 2003/1177: GST and date of effect of a permission to account on a cash basis
Date of decision: 6 February 2003
Business line: Indirect Tax

Issue
Can the date of effect of the permission for an entity to account on a cash basis, under section 29-45 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 entity applied to the Commissioner for permission?

Decision
No, the date of effect of the permission for an entity to account on a cash basis under section 29-45 of the GST Act cannot be the first day of a tax period that has ended before the entity applied for the permission.

Facts
The entity is registered for goods and services tax (GST) and does not meet any of the requirements in section 29-40 of the GST Act that allows an entity to choose to account for GST on a cash basis. Consequently, the entity applied to the Commissioner for permission to account on a cash basis. The entity also requested that the date of effect for the permission to be the start of a tax period that ended prior to the entity seeking permission. The entity satisfies the requirement under subsection 29-45(1) of the GST Act for the Commissioner to permit the entity to account on a cash basis.

Reasons for decision
Summary: Section 29-45 of the GST Act provides that an entity may apply to the Commissioner for permission to account on a cash basis where certain requirements are satisfied. Under subsection 29-45(2) of the GST Act, the Commissioner must notify the entity of any decision made in relation to section 29-45. Where the Commissioner decides to permit the entity to account on a cash basis, the notice must specify the date of effect of the permission. The Commissioner considers that the date of effect of the permission will be the first day of the tax period during which the entity seeks permission or any subsequent tax period. However, the date of effect of the permission cannot be the first day of a tax period that has ended before the entity applied for the permission.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 29-40 section 29-45 subsection 29-45(2)
Subject references: Goods and services tax GST tax periods Cash basis Non cash basis