GST and revocation of approval of a GST group member when under administration

Will the entity, a member of a GST group, have its GST group membership approval revoked by the Commissioner under subsection 48-70(2) of the A New Tax System (Goods and Services) Act 1999 (GST Act) when the entity, and no other GST group member, goes under administration?

No, the entity will not have its GST group membership revoked by the Commissioner under subsection 48-70(2) of the GST Act when the entity, and no other GST group member, goes under administration.

The entity is a member of a GST group. The entity goes under administration and is the only member of the GST group that goes under administration.

While under administration, the entity continues to trade.

The entity has not become a member of another GST group nor has it registered any branches for GST purposes.

Under subsection 48-70(2) of the GST Act, the Commissioner must revoke the approval of one of the members of a GST group if satisfied that the member does not satisfy the membership requirements for the GST group.

Section 48-10 of the GST Act provides that an entity satisfies the membership requirements of a GST group if the entity: • satisfies the relevant relationship requirements with the other members of the GST group • is registered for goods and services tax (GST) • has the same tax periods applying to it as the tax periods applying to all the other members of the GST group • accounts for GST on the same basis as all other members of the GST group • is not a member of any other GST group, and • does not have any branch that is registered under Division 54 of the GST Act.

The entity goes under administration and continues to trade. Being under administration does not affect the relationship that the entity has with other group members, its GST registration or its tax periods and accounting basis. The entity has not become a member of another GST group nor has it registered any branches for GST purposes. Therefore, being under administration does not prevent the entity from satisfying the membership requirements of a GST group as set out in section 48-10 of the GST Act.

As such, the entity's GST group membership approval will not be revoked by the Commissioner under subsection 48-70(2) of the GST Act.

Note: Even though the entity is able to remain in the group, the administrator appointed to the entity must account for GST as a separate entity, and separate from the GST group. The administrator, in their capacity as administrator of the entity, is not a member of the GST Group that the entity is a member of. Consequently the administrator cannot account for GST as a member of a GST group but accounts for GST separately as a separate entity. Any supplies or acquisitions made by the administrator to or from other group members are not intra-group supplies and will be taxable supplies or creditable acquisitions where the other requirements of Division 9 and Division 11 of the GST Act are met.