Issue
Can the joint venture be approved as a GST joint venture under section 51-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), where some of the participants in the joint venture are not registered for goods and services tax (GST)?
Decision
No, the joint venture cannot be approved as a GST joint venture under section 51-5 of the GST Act where some of the participants of the joint venture are not registered for GST.
Facts
The participants in the joint venture are an individual and a trust.
The trust is registered for GST. The individual is not registered for GST.
Reasons for Decision
Under paragraph 51-5(1)(d) of the GST Act, one of the requirements for the Commissioner to approve two (2) or more entities as the participants in a GST joint venture is that each of the entities must satisfy the participation requirements for that GST joint venture.
Section 51-10 of the GST Act sets out what is required for an entity to satisfy the participation requirements for a GST joint venture, or a proposed GST joint venture. Paragraph 51-10(c) of the GST Act requires an entity to be registered to satisfy the participation requirements for a GST joint venture.
In this case, one of the participants in the proposed GST joint venture, the individual, is not registered for GST. As such, the individual does not satisfy the participation requirements for a GST joint venture.
Therefore, the Commissioner will not approve the two entities as participants in a GST joint venture under section 51-5 of the GST Act, as one of the entities does not satisfy the participation requirements of a GST joint venture.