Anya’s business turnover has dropped below $75,000, the ATO’s threshold for paying GST. Deregistering for GST is simple, but there are a couple of sticking points that chartered accountant GAIL FREEMAN brought to her attention.

Anya’s small business recently got a little smaller, so her turnover has not reached $75,000 for the last six months and it is not expected to increase in the future. 

As a result, she decided to deregister from GST so that she didn’t have to pay it going forward.

I told her deregistering from GST was relatively simple; there was a form to complete.

“If, as in your case, you have been registered for more than 12 months, the ATO must cancel your registration,”I said.

“However, in the case of anyone who has been registered for less than 12 months, the ATO may cancel the registration at its discretion.”

I advised her there were some other things she needed to do that were a little more complex. 

“Firstly, you need to lodge your final BAS within 21 days of the cancellation date and there may be some GST adjustments you need to make to that BAS,” I said. 

“You also need to make sure that that BAS is paid before your deregistration is finalised.

“The biggest change is in the invoices you send out. You cannot issue a tax invoice, you have to issue an invoice and, on that invoice, it has to say GST $0.00 just to make it clear to all concerned that you are not registered for GST and that they have no GST claim against the amount that has been paid to you.

“There is a further adjustment required in your final BAS for plant and equipment you bought within the last five years and that you claimed an input tax credit for. 

“Some of that refund you received may have to be repaid if you are still using the equipment. We can calculate for you the amount of this adjustment to go into your final BAS. I note you bought some new computer equipment recently, which I assume you are still using.”

Anya confirmed this, saying: “What happens if my turnover starts to increase and I decide to expand the business?”

I said: “You are required to register for GST when you predict that your turnover in the next 12 months is going to exceed the threshold of $75,000.

“This may happen next month or in six months’ time. Either way, you are required to register at that point. Registering is as simple as it was to deregister. You can complete a form or even ring the ATO. 

“The fact that you are registered or not, will appear on your Australian Business Register record and can be easily checked.

“Many businesses register and deregister from GST on multiple occasions. When you re-register you will have to start using tax invoices again and you need to show the amount of GST charged on every invoice.

“The ATO has a summary sheet on registering for GST and how to prepare invoices which you can easily obtain from the tax office site.

“As you can see, registering or deregistering from GST is a fairly simple process. However, it is the invoicing requirements and the disposal of assets on deregistering that are the likely sticking points.”

Anya asked us to help deregister her from GST, and said she would send me the proposed invoice layout to ensure she was satisfying all the criteria.

If you need any information on GST, small business, or any tax related matter contact the expert team at Gail Freeman & Co Pty Ltd on 02 6295 2844, email [email protected] or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.

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