Published: May 2012

Ruling: Q1: Are you required to be registered for goods and services tax (GST)? Decision Yes, if your GST turnover exceeds the registration turnover threshold, you will be required to be registered for GST.

Relevant facts and circumstances: You are a professional writer and your enterprise (business) involves writing for Australian and overseas publications. The turnover of those activities varies but the income derived annually from Australian sources rarely exceeds $60-65K. You also write for a number of overseas publications, for which you get paid in their local currency, which is later transferred to your Australian bank account. You always declare this income in your income tax return and pay tax at your marginal rate. This income varies but has the potential to grow substantially. You also operate a website, which generates some income. It has the potential to grow significantly. You pay your income tax on all your income by quarterly instalments and lodge an annual income tax return and pay any balance payable. In the 2010-11 income year, all the above income taken together exceeded the $75K GST registration turnover threshold. However, in the 2011-12 income year, your income from all sources will be significantly lower than in the previous year. During any income year, you cannot accurately estimate your income for the following income year. In the 2010-11 income year, more than $20K of your income was derived from non Australian entities, which are not required to pay Australian GST. In the past you operated your enterprise through a company, which was registered for GST. You incurred considerable time and expenses to keep track of your income and expenses for GST purposes. It took time away from the activities that produced your income. Considering your situation, you request that the Commissioner should make a special ruling to exempt you from registration for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act) - section 23-5 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) - section 23-15 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) - section 188-10 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) - section 188-15 | A New Tax System (Goods and Services Tax) Act 1999 (GST Act) - section 188-20 Reasons for the decision | Section 23-5 of the GST Act provides that you are required to be registered for GST if: | · you are carrying on an enterprise; and | · your GST turnover meets the registration turnover threshold. | You are carrying on an enterprise of writing articles to Australian and overseas publications. You are required to be registered for GST, if your annual turnover from your enterprise meets the registration turnover threshold. | Under subsection 23-15(1) of the GST Act, unless you are a non-profit body, your registration turnover threshold is $75,000. Subsection 188-10(1) of the GST Act provides that your annual turnover meets a particular turnover threshold if: | · your current annual turnover is at or above the turnover threshold and the Commissioner is not satisfied that your projected annual turnover is below the turnover threshold; or | · your projected annual turnover is at or above the turnover threshold. | Section 188-10(2) of the GST Act provides that your annual turnover does not exceed a particular threshold if: | · your current GST turnover is at or below the turnover threshold and the Commissioner is not satisfied that your projected GST turnover is above the turnover threshold; or | · your projected GST turnover is at or below the turnover threshold. | Subsection 188-15(1) of the GST Act provides that your current GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made or likely to make during the 12 months ending at the end of that month other than supplies that are input taxed or supplies that are not for consideration or supplies that are not made in connection with an enterprise that you carry on. | Subsection 188-20(1) of the GST Act provides that your projected GST turnover at a time during a particular month is the sum of the values of all the supplies that you have made or likely to make during that month and the next 11 months, other than supplies that are input taxed or supplies that are not for consideration or supplies that are not made in connection with an enterprise that you carry on. | Item 2 of subsection 38-190(1) of the GST Act provides that a supply is GST-free if it is made to a non resident who is not in Australia when the thing supplied is done and the supply is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia. Therefore, your supply of articles to overseas publications is a GST-free supply. | The supply of your articles to Australian publications is not an input taxed supply under any provision of the GST Act. Therefore, the value of your articles supplied to Australian and overseas publications is taken into account in calculating your current and projected annual turnover at any particular time. | During the 2010-11 income year, your current annual turnover exceeded the registration turnover threshold. However, you could not accurately estimate your projected annual turnover. | During the 2011-12 income year, you estimate that your turnover will be below the registration turnover threshold. However, you cannot accurately estimate your projected annual turnover. | GSTR 2001/7 | Goods and Services Tax Ruling GSTR 2001/7 (GSTR 2001/7) refers to the meaning of GST turnover including the effect of section 188-25 on the projected GST turnover. Paragraphs 16-19 of GSTR 2001/7 refers to whether your GST turnover meets or does not exceed a turnover threshold and state: | 16. Whether you have a GST turnover that meets or does not exceed a particular turnover threshold depends on an objective assessment of your projected GST turnover and current GST turnover. An 'objective assessment' is one that a reasonable person could be expected to arrive at having regard to the facts and circumstances which apply to your enterprise at the relevant time. The Commissioner will accept your assessment of these turnovers unless he has reason to believe that your assessment was not reasonable. | 17. Under sub-section 188-10(1), you meet a particular threshold if your projected GST turnover is at or above the threshold. You also meet a turnover threshold if your current GST turnover is at or above the turnover threshold and it is not possible to conclude that your projected GST turnover is below the threshold. This will occur if your projected GST turnover is also above the relevant threshold, or if your circumstances are such that it is not possible to calculate a projected GST turnover. In either of these situations, the Commissioner can not be satisfied that your projected GST turnover is below the turnover threshold. | 18. Similarly, under sub-section 188-10(2), you have a GST turnover that does not exceed a particular turnover threshold if your projected GST turnover is at or below that threshold. You also do not exceed a turnover threshold if your current GST turnover is at or below the turnover threshold and it is not possible to conclude that your projected GST turnover is above the threshold. This will occur if your projected GST turnover is at or below the relevant threshold or your circumstances are such that it is not possible to calculate a projected GST turnover. In either of these situations, the Commissioner can not be satisfied that your projected GST turnover is above the turnover threshold. | 19. Although your current GST turnover and your projected GST turnover may be capable of being determined on every day during a month, there is no requirement for continuous recalculation. However, under the GST Act there are obligations if you meet or exceed a particular threshold and there is an opportunity for you to make certain elections if you do not exceed a particular threshold. Therefore, you should be aware of the relevant thresholds likely to affect you and consider whether your turnover may be sufficiently close to the relevant thresholds to make a review prudent. For example, Entity A conducts an enterprise with a GST turnover of $70,000 and is not registered for GST. Because Entity A is aware that a $5,000 increase in its GST turnover will result in the $75,000 registration turnover threshold being met, it should monitor changes in its turnover. Entity B by contrast, is registered for GST, conducts an enterprise with a GST turnover of $600,000 and accounts on a cash basis. The nearest relevant threshold is the cash accounting turnover threshold ($2,000,000). Entity B may decide to review its current GST turnover and projected GST turnover on an annual basis whilst being aware that a significant change in turnover may require a further review. | Conclusions | Considering the nature of your enterprise and the current and projected turnovers, it is not possible for the Commissioner to conclude that you were required to be registered for the 2010-11 and 2011-12 income years. You should make an objective assessment and determine whether you were required to be registered for the two income years. | You have mentioned that your income from articles published in overseas publications and other ads in your website has the potential for substantial increase. Therefore, you should monitor changes to your current and projected turnovers to determine whether you are required to be registered for GST. | If you become required to be registered for GST and you fail to register, you may be subjected to administrative penalties. | Section 288-40 of the Taxation Administration Act 1953 provides that you are liable to an administrative penalty of 20 penalty units, if you fail to apply for registration or to apply for cancellation of registration, as required by the GST Act.


Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Subject: GST and requirement for registration