Registration
GST cancellation
GST cancellation is the process of cancelling your GST registration with the ATO when you stop carrying on an enterprise or your turnover is, and is expected to stay, below the registration threshold.
GST cancellation means formally ending your GST registration. You can do this through ATO online services, through a registered tax or BAS agent, or by contacting the ATO. It is not automatic, so a business that stops trading or falls below the threshold must still apply. If you remain registered, you must continue lodging BAS even when you have nothing to report.
There are two main situations in which cancellation arises. The first is when you stop carrying on an enterprise, for example you close or sell your business. In that case you generally must cancel promptly, and ATO guidance says to do so within 21 days. The second is when you are still trading but your turnover is below the threshold and is expected to stay below it. In that case cancellation is optional, though you cannot cancel if you are required to be registered, as with taxi and ride-sourcing drivers.
Cancelling has consequences. On the date it takes effect, you may need to account for GST on assets you still hold if you claimed credits when you bought them, because you will no longer be using them to make taxable supplies. The GST is generally calculated on the market value of those assets at the time, and it is added to your final BAS. Trading stock and equipment are the common examples.
You will also need to lodge a final BAS covering the period up to cancellation. This should report all sales and purchases for the period, including any adjustments and the GST on assets held. Do not assume you can skip it. Any outstanding amounts remain payable, and the ATO can follow up unpaid BAS or unlodged returns after cancellation.
After cancellation you stop charging GST on your sales, and you can no longer claim credits on purchases. You also should not issue tax invoices showing GST. Your ABN is separate from your GST registration, so cancelling GST does not cancel your ABN. If you want to end the ABN as well, that is a separate process through the Australian Business Register.
A common mistake is simply stopping lodging BAS without cancelling, which can lead to penalties and estimated assessments. Another is cancelling and then re-registering soon after to claim credits on a big purchase, which the ATO may examine closely. A third is forgetting the assets rule and being surprised by a final BAS amount.
This is general information only. Because the timing and asset rules can be technical, speak to the ATO or a registered tax professional before you cancel.
Worked example
Alana closes her design studio and cancels GST registration. She still owns a computer on which she claimed a credit, and its market value on the cancellation date is $660 including GST. The GST in that value is $660 divided by 11, which is $60. She includes $60 on her final BAS, along with all sales and purchases up to the cancellation date.
Practical tips
- Apply to cancel promptly after you stop trading, and lodge your final BAS for the period up to the cancellation date.
- Check the GST on assets and stock you still hold, because it may be payable on cancellation.
- Remember that cancelling GST does not cancel your ABN. These are separate steps.