ATO Community

Parallel Companies and GST

I'm new

Views 498

Replies 2

I have two companies. I am the sole director and shareholder for each one.

 

Company A was set up in 2017 and was originally a bit of a gimmick (long story) to own my personal vehicles (a car and a couple of motorbikes). It wasn't originally intended to trade actively (just a holding company to own my vehicles).

 

Company B was set up in 2018 for the purpose of owning and renting cars to taxi and rideshare drivers (ie an actual trading business).

 

In 2019 I figured that I'd put a car or two under Company A and earn some extra money - at the moment it's three cars and won't be increasing. It's basically a semi-hobby to earn some extra income on the side, which I will then spend on my personal cars and motorbikes (ie it's a way of creating an income to pay for my toys).

 

On 17th January 2020 Company B hit the $75,000 threshold for GST, and has been paying GST since then.

 

Company A is never going to pass $75,000 in a 52 week period, so does not have to have GST-registered.

 

However, although Company A is a hobby on the side it is basically doing the same thing as Company B (which now has to pay GST).

 

Does Company A need to become GST-registered is it is a parallel company to Company B, or can I leave GST out of A? Is this considered GST avoidance by the ATO?

 

(Note: Reading between the lines: Company A may or may not be a means to assist in avoiding driver's licence demerit points. The car and bikes are of a non-commercial use (eg trail bikes) so it's not suitable to merge the two companies).

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Devotee

Replies 0

Even if Company A is considered to be carrying on an "enterprise" similar to Company B, it's not required to be registered if its GST turnover does not exceed the threshold, unless it forms a GST group with Company B.
2 REPLIES 2

Champion

Replies 0

The changes apply prospectively in relation to assessed liabilities that arise in relation to tax periods commencing on or after 1 April 2020. They may also apply retrospectively to a previous tax period where, on or after 1 April 2020, the Commissioner makes a Div 268 estimate of a net amount relating to that previous tax period (to the extent that the net amount has not been assessed).

 

Most helpful response

Devotee

Replies 0

Even if Company A is considered to be carrying on an "enterprise" similar to Company B, it's not required to be registered if its GST turnover does not exceed the threshold, unless it forms a GST group with Company B.