Issue
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 into liquidation?
Decision
Yes, the entity will 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 into liquidation.
Facts
The entity is a member of a GST group. The entity goes into liquidation and is the only member of the GST group that goes into liquidation.
Reasons for Decision
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 sets out the membership requirements for GST groups. One of the membership requirements that must be satisfied is that a group member must have the same tax periods applying to it as the tax periods applying to all the other members of the GST group (paragraph 48-10(1)(d) of the GST Act).
Paragraph 27-40(1)(b) of the GST Act provides that where an entity goes into liquidation, the tax period applying to that entity is taken to have ceased at the end of the day before the liquidation.
The entity goes into liquidation and as such, its tax period ceased the day before it entered into liquidation. Therefore, the entity does not continue to have the same tax periods as the other members of the GST group and does not satisfy the membership requirements for GST groups as set out in section 48-10 of the GST Act.
Therefore, the approval of the entity's GST group membership is revoked under subsection 48-70(2) of the GST Act. [HISTORY: This ATO ID was amended on 27 April 2007 by deleting the reference made to the liquidation being at a time other than the first day of the entity's tax period. The ATO view regarding when an approval is revoked is contained in ATO ID 2004/693 .]