Private ruling: GST and cancellation of registration
Date of advice: 9 July 2015
Published: July 2015

Ruling: Q1: Do you have an increasing adjustment in respect to your farming property pursuant to Division 138 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you cancel your GST registration? | A1: No. Subsection 138-5(1) of the GST Act provides that you have an increasing adjustment if the following two criteria are met: • your GST registration is cancelled, and • immediately before the cancellation takes effect, your assets include anything in respect of which you were, or are, entitled to an input tax credit (ITC). You intend to cancel your GST registration. In regard to the second point above, your assets prior to the cancellation of your GST registration include the farming property. As you purchased the property GST-free, you were not entitled to an ITC in respect to the acquisition of the property. Therefore you will not have an increasing adjustment pursuant to Division 138 of the GST Act in respect to the farming property when you cancel your GST registration. You may have an increasing adjustment in relation to other assets you have acquired, if you are or were entitled to an input tax credit for those assets, and hold them at the time your GST registration is cancelled. | Q2: Do you have an increasing adjustment in respect to the acquisition of your farming property pursuant to Division 135 of the GST Act? | A2: No. Subsection 135-5(1) of the GST Act provides that you have an increasing adjustment if the following two criteria are met: • you were the recipient of a GST-free supply of farmland pursuant to section 38-480 of the GST Act, and • you intend that some or all of the supplies made through the enterprise to which the supply relates will be supplies that are neither taxable nor GST-free. In this case you were the recipient of a GST-free supply of farmland pursuant to section 38-480 of the GST Act. However the supplies made through your farming enterprise are taxable supplies and are not neither taxable nor GST-free supplies. As the second criterion above is not satisfied you do not have an increasing adjustment in respect to your farming property pursuant to Division 135 of the GST Act.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You are registered for GST and carry on an enterprise of farming. You purchased a farming property. The farming property was sold to you GST-free pursuant to section 38-480 of the GST Act. In carrying on your enterprise on the property you have made taxable supplies of livestock and products and reported the sales on your Business activity statements (BAS). In carrying on your enterprise on the property you did not make supplies that were neither taxable nor GST-free supplies.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Division 135, and | A New Tax System (Goods and Services Tax) Act 1999 Division 138.