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GST Cancellation 

Section 52 of the GST Act 1985 explains the cancellation of GST registration process.

 

GST registration can be cancelled when:

  • It is optional for the taxpayer to cancel GST registration if taxable suppliers are less than $60,000. When you voluntarily cancel your registration, cancellation takes effect from the last day of the taxable period in which the application is accepted.
  • Taxpayer also cancels registration if taxable supplies cease completely. In this case, the person must notify the IRD within 21 of the date of cessation, so their cancellation takes effect from the last date of the period which their taxable activities cease.
  • IRD has the power to cancels taxpayer’s registration if they feel that a person is not carrying on a taxable activity.
  • A final return must be filed to the IRD covering the final period from the beginning of the final taxable period up to the date registration ceased.
  • In the final returns, it is important to make output adjustments for any assets that were part of the taxable activity. It means that taxpayer will have to pay back the GST on assets at market value at the date of the final returns
  • Although registration is ceased, the taxpayer still needs to file all overdue returns and make payments for overdue taxes in the past. Cancellation of GST does not mean that taxpayer escapes their filing and paying tax obligation.
  • It is also the taxpayer’s obligation to keep all accounting and business records for at least seven years after the end of the taxable period in which registration ceased. 

 

Taxpayer’ obligations when ceasing registration of GST:

  • A final return must be filed to the IRD covering the final period from the beginning of the final taxable period up to the date registration ceased.
  • In the final returns, it is important to make output adjustments for any assets that were part of the taxable activity. It means that taxpayer will have to pay back the GST on assets at market value at the date of the final returns
  • Although registration is ceased, the taxpayer still needs to file all overdue returns and make payments for overdue taxes in the past. Cancellation of GST does not mean that taxpayer escapes their filing and paying tax obligation.
  • It is also the taxpayer’s obligation to keep all accounting and business records for at least seven years after the end of the taxable period in which registration ceased. 

Disclaimer: The following answer necessarily sets out general principles only. The facts of particular cases always need to be considered carefully, and it may be necessary to obtain advice from a tax expert.

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