GST and cancellation of registration where annual turnover is below the registration turnover threshold

Can the entity, a supplier of goods and services that has been registered for goods and services tax (GST) for more than 12 months, have its GST registration cancelled under subsection 25-55(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when its annual turnover falls below the registration turnover threshold?

Yes, the entity that has been registered for more than 12 months can have its GST registration cancelled under subsection 25-55(1) of the GST Act when its annual turnover falls below the registration turnover threshold.

The entity is a supplier of goods and services. The entity has been registered for GST for more than 12 months. The entity is downsizing the scale of its business activities with the result that its annual turnover is below the registration turnover threshold.

The entity has applied for cancellation of its registration in the approved form.

Under subsection 25-55(1) of the GST Act, the Commissioner must cancel an entity's GST registration if: • the entity applies for cancellation of registration in the approved form; • at the time the entity applies for cancellation of registration, the entity has been registered for at least 12 months; and • the Commissioner is satisfied that the entity is not required to be registered.

The entity has applied for cancellation in the approved form and has been registered for more than 12 months. Therefore, it is necessary to determine whether the Commissioner is satisfied that the entity is not required to be registered.

Under section 23-5 of the GST Act, an entity is required to be registered if it: • carries on an enterprise and • its annual turnover meets the registration turnover threshold.

The entity is downsizing the scale of its business activities with the result that its annual turnover is below the registration turnover threshold. Therefore, even though the entity is carrying on an enterprise, because its annual turnover does not meet the registration turnover threshold it is not required to be registered for GST.

Accordingly, the entity can have its GST registration cancelled under subsection 25-55(1) of the GST Act when its annual turnover falls below the registration turnover threshold. [Note 1: As the entity is continuing its enterprise, if it at sometime in the future it meets the turnover threshold, it will be required to re-register under section 23-5 of the GST Act. Note 2: Where an entity ceases to be registered for GST, and still holds assets for which it has claimed input tax credits, it may have an increasing adjustment in its concluding tax period (section 138-5 of the GST Act).]