ATO Encourages NFP's to De-Register for GST!

During October 2005, the Australia Tax Office is writing to approximately 16,000 Not for Profit organisations that are voluntarily registered for GST with a view to encouraging them to de-register!

The main purpose of the mail out is to help organisations clarify whether they are eligible to cancel their GST registration and spell out the pros and cons of de-registering.

The mail out is in four sections:

– a letter

– a questionnaire

– the fact sheet called Cancelling your GST registration, and

– an Application to cancel registration form.

The questionnaire is aimed at helping organisations to self-assess their eligibility to cancel their GST registration.

GST registration

The GST registration turnover threshold for a non-profit organisation is $100,000 ($50,000 for other organisations).

This means a non-profit organisation is not required to be registered for GST unless its annual turnover is $100,000 or more.

A Not for Profit organisation may voluntarily register for GST if its annual turnover is under $100,000. This may be because it wants to claim back the credits for the GST it pays in the price of goods and services it purchases for use in its activities.

However, the decision to remain voluntarily registered for GST is one that ought to be based on the administrative needs of the organisation.

Benefits of not being registered for GST

Not for Profit organisations with an annual turnover under $100,000 may prefer not to register for GST because they consider that it is better to forgo the GST credits that may be available, rather than undertake the tax obligations that registration places on them.

These tax obligations include:

– paying GST on memberships

– paying GST on other sales (unless they are GST-free or input taxed)

– issuing tax invoices for sales of $55 or more, and

– completing and lodging Business activity statements.

If an organisation determines it is eligible to cancel its GST registration, it can do so by:

– phoning the Tax Office on 13 28 66 between 8.00am and 6.00pm, Monday to Friday, or
– returning the completed Application to cancel registration form to the Tax Office in the envelope provided.