GST and date of effect of revocation of approval of a GST group member

Under section 48-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), can the entity, a liquidated company that had its approval to be a member of a GST group revoked, have the date of effect of that revocation as the beginning of a tax period after which it entered into liquidation?

No, under section 48-85 of the GST Act, the entity cannot have the date of effect of revocation of its approval to be a member of a GST group as the beginning of a tax period after which it entered into liquidation.

The date of effect of the revocation is the beginning of the tax period during which the entity entered into liquidation.

The entity is a liquidated company that has had its approval to be a member of a GST group revoked. The entity entered into liquidation on the last day of a tax period.

The entity is the only member of the GST group that entered into liquidation at that time.

Section 48-85 of the GST Act sets out the date of effect of approval or revocation of approval of GST groups. Under subsection 48-85(1) of the GST Act, the Commissioner must decide the date of effect of any approval or revocation of approval under Division 48 of the GST Act.

Subsection 48-85(2) of the GST Act provides that the date of effect may be the day of the decision, or a day before or after that day. However, under paragraph 48-85(3)(a) of the GST Act, the date of effect must be the beginning of a tax period applying to the members of the GST group in question.

A tax period that applies to a GST group is the first tax period commencing on or after all the members have satisfied the requirements of a GST group.

Section 48-10 of the GST Act sets out the membership requirements that must all be satisfied for an entity to become, and remain, a member of a GST group. One of those requirements 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 or receivership or for any reason ceases to exist, the tax period applying to that entity is taken to have ceased at the end of the day before the liquidation.

As the entity entered into liquidation on the last day of a tax period, the entity's tax period is taken to have ceased the day before it entered into liquidation, which is two days before all of the other entities in the GST group (i.e. the last day of the tax period plus the day before). As the entity is the only member of the GST group that entered into liquidation at this time, it does not continue to have the same tax period applying to it as all the other members of the GST group. The tax period of the liquidated entity ended before the tax period of the other members of the GST group.

As the GST Act requires the date of effect of any revocation of approval to be the beginning of a tax period applying to the members of the GST group, the date of effect of the revocation is the beginning of the tax period during which it entered into liquidation.

The date of revocation cannot be the beginning of the tax period after which the entity entered into liquidation as the entity did not satisfy the membership requirements of the GST group for the whole of the tax period in question. If a GST group member fails to satisfy the membership requirements of a GST group for even one day in a tax period, then it cannot group for the whole of that tax period.

Therefore, under section 48-85 of the GST Act, the entity cannot have the date of effect of revocation of its approval as a member of a GST group as the beginning of a tax period after which it entered into liquidation. The date of revocation is the beginning of the tax period in which it entered into liquidation. Note: Paragraph 48-85(3)(a) of the GST Act takes effect from 13 December 2004. Prior to this date, the requirement that the date of effect must be the beginning of a tax period applying to the members was given in subsection 48-85(2) of the GST Act.