1. Norah operates a business in Australia, which provides numerous services and therefore is subject to the New Tax System Act 1999. Consequently, Norah needs to establish whether her businesses actions create an obligation to be subject to the Goods and Services Tax (GST).
All sections mentioned, are in reference to the New Tax System Act 1999.
Is Norah required to register?
In order for Norah to have a GST obligation, according to s23-10, her entity must be carrying on an enterprise, and subsequently be required to register. Thus, under section 9-20 by Norah providing yoga services, health related products and a small café, her business constitutes a for-profit enterprise for tax purposes.
The registration threshold in s23-15 dictates that Norah must register for GST when her annual turnover exceeds the turnover threshold of $75 000. Norah’s annual expected turnover from specially her yoga services is expected to be approximately $120,000. Thus, Norah is in excess of the registration threshold, and therefore she is required to register for GST, as she does not qualify for an exception under s144-5.
Are Norah’s packages and Café goods a Taxable Supply?
To satisfy the requirements of a taxable supply per section 9-5, there must be:
The definition of supply under section 9-10 is exceptionally broad and therefore many activities, including yoga classes and food, constitute making a supply, as supported by Reliance Carpet (2008). In addition to this, Section 9-10(2) states that supply encompasses provision of goods and services. Hence, both the food sold and the yoga classes provided are classified as providing a supply.
Despite the yoga packages having an expiration of two months, in line with the decision of Qantas Airways (2012), all packages, including forfeited classes will have classified as constituting supply.
Under section 9-15(1), consideration is received when Norah receives payment of $660 for the services and yoga she provides presumably money for the food sold at the Café.
Course or furtherance of the enterprise
As discussed previously, Norah’s business is considered to be an enterprise for tax purposes, and therefore the selling of yoga packages and food is in furtherance of her enterprise pursuant to section 9-20. Norah’s yoga classes and food sold at the Café are aligned with the over-arching organisation principles of providing health services, and therefore further her businesses interests. Overall, satisfying her clients demands, and providing her with additional profits. Hence, as depicted in Reliance Carpet, Norah is engaging in supply which is considered in the course of furtherance of that enterprise.
Connection to the indirect tax zone
Norah’s business operates in the northern suburbs of Melbourne, thus, per section 9-25, it is connected to Australia.
As discussed above, Norah is required to be registered, and subsequently fulfilling the element of taxable supply requiring registration....