GST and exercise of discretion to allow late election to pay GST by instalments: Activity Statement posted but not received by Tax Office

Will the Commissioner exercise his discretion under subsection 162-25(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to allow the entity, a business operator, to make a late election to pay goods and services tax (GST) by instalments when: • the entity has a good compliance history • the entity meets the requirements to elect to pay GST by instalments • the entity posted its activity statement (AS), with its election to pay GST by instalments, to the Tax Office before the due date; and • the entity's AS was lost in the post?

Yes, the Commissioner will exercise his discretion under subsection 162-25(3) of the GST Act to allow the entity to make a late election to pay GST by instalments since the entity is eligible to elect to pay GST by instalments and, having regard to the entity's good compliance history, exceptional circumstances led to the entity not making its election by the due date.

The entity is a business operator that is registered for GST. The entity paid GST by instalments in previous financial years, making its elections by the due date.

The entity meets the requirements in section 162-5 of the GST Act to elect to pay GST by instalments and made this election on its September quarter AS. The entity's AS was sent in a paper form, via the Post Office on 28 October. The entity does not have a Post Office receipt to show that it sent the AS.

The Tax Office did not receive the entity's AS and sent a request to the entity to lodge its September AS. The entity's tax agent promptly lodged the September AS over the phone. The entity requested, in the approved form, the Commissioner to exercise his discretion to allow the entity to make a late GST instalment election.

The entity has a good compliance history including lodging their ASs by the due date and paying GST instalments on time.

An entity that wants to and is eligible to pay GST by instalments must make an election: • on or before 28 October in the applicable financial year (subsection 162-25(1) of the GST Act), or • if an entity only became eligible to elect to pay GST by instalments after 28 October in that financial year, its current lodgment record is not more than six months and subsection 162-25(2) of the GST Act has not applied to it before, the entity must make an election on or before the first day that the GST return would be due for the quarter in which it first becomes eligible (subsection 162-25(2) of the GST Act).

However, pursuant to subsection 162-25(3) of the GST Act, the Commissioner may, in accordance with a request from an entity in the approved form, allow the entity to make its election on a specified day occurring after the day provided for under subsection 162-25(1) or 162-25(2) of the GST Act. This discretion is exercised on a case by case basis after considering the individual circumstances of the entity.

The discretion in subsection 162-25(3) of the GST Act only gives the Commissioner a discretion in relation to the date of an entity's election. It does not give the Commissioner a discretion in relation to an entity's eligibility to elect to pay GST by instalments. Therefore, an entity must still meet the eligibility requirements in subsection 162-5 (1) of the GST Act before the Commissioner is able to allow an entity to elect to pay GST by instalments after the legislated due date of the election. That is, the Commissioner is unable to allow an entity to elect to pay GST by instalments late where the entity is not eligible to pay GST by instalments.

Factors that the Commissioner will consider when determining whether he will allow an entity to make a late election include: • has the entity requested, in the approved form, the Commissioner to exercise his discretion to allow a late election from the entity to pay GST by instalments; • does the entity have a valid reason for a late election; • are there exceptional circumstances that lead to the entity lodging their election late; • has the entity complied with all its tax obligations on time and does it have a good lodgment and compliance record; and • has the entity made a habit of making an election to pay GST by instalments late, that is, the Commissioner generally only exercises his discretion for one-off difficulties?

The entity is eligible to elect to pay GST by instalments and has applied in the approved form for the Commissioner to exercise his discretion.

The entity posted their AS to the Tax Office on 28 October. The Tax Office did not receive the AS and the entity has no receipt to evidence that it posted the AS. This circumstance, of itself, is not an exceptional circumstance such that it warrants the Commissioner exercising his discretion.

However, the entity has a good compliance history, including complying with its obligations to give ASs to the Commissioner and paying GST instalments on time. In addition, the entity's previous elections to pay GST by instalments were made by the due date. Therefore, the entity's failure to elect to pay GST by instalments by the due date is an exceptional circumstance having regard to their history. Its late election is a one off occurrence.

Therefore, the Commissioner will exercise his discretion under subsection 162-25(3) of the GST Act to allow the entity to make a late election to pay GST by instalments. [History: This ATO ID was amended on 2 November 2004. References to provisions in Division 165 of the GST Act in the original ATO ID have been replaced with references to provisions in Division 162 of the GST Act.] [History: ATO ID 2004/447 was amended on 16 July 2007 to change reference from Business activity statement to activity statement.]