Special arrangements
GST branch
A GST branch is a separately identifiable part of a business, such as a division or location, that can be registered for GST separately from the main entity.
A GST branch lets a large or complex business register one of its internal parts separately for GST. The branch is not a different legal entity, because it still belongs to the same company or trust, but it can report GST in its own right. This is helpful where an organisation has divisions with different accounting systems, different reporting needs or different geographic locations.
To register a branch, certain conditions must be met. The branch must be a part of the entity that is identifiable and have its own accounting system, or a part of one, that can reasonably separate the branch's transactions from the rest of the business. The branch must be carrying on an enterprise. The entity must apply to the ATO to register the branch, and the ATO will check the conditions.
After registration, the branch accounts for GST on its own supplies and acquisitions and typically lodges its own Business Activity Statement. This keeps the numbers for the branch separate from the head office, which can reduce complexity for large organisations where head office would otherwise have to merge figures from multiple systems. It also provides a clear audit trail by division.
Dealings between a branch and the rest of the entity are treated differently from dealings in a single entity. Because the branch is separately registered, supplies between it and the parent entity are generally treated as supplies for GST purposes, and appropriate documentation may be needed. This is a significant difference from a GST group, in which internal supplies are ignored entirely.
The entity as a whole remains responsible for the GST obligations of the branch. The legal entity cannot avoid liability just because the branch lodged separately. Equally, a branch cannot register if it would be better described as a distinct business. When a branch is a fully separate enterprise run by a different entity, that is a different arrangement altogether.
Registering a branch can have an impact on how credits are claimed, because credits belong to whichever part of the business acquired the goods. Documents such as tax invoices should clearly name the right party. If a branch is later cancelled, the activities are generally absorbed into the main registration, and the entity should look at whether any adjustments are needed.
The rules involve judgement about accounting systems and the nature of the branch, so this page is general information only. Confirm your options with the ATO or a registered tax professional.
Worked example
A national retailer registers its online division as a GST branch because the division has a separate accounting system. In the quarter, the online division has $2,200,000 in sales including GST, so its GST collected is $200,000, and credits of $120,000, giving $80,000 net payable on its own BAS. The stores continue to report on the main BAS. Stock transferred from the stores to the online division is treated as a taxable supply.
Practical tips
- Confirm the branch has its own accounting system or ability to separate transactions before applying to the ATO.
- Treat transfers between branch and head office as supplies and keep proper documentation.
- Remember the whole entity remains liable for the branch GST, so keep oversight of branch lodgments.