Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008-2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 GST groups and GST joint ventures 7
Chapter 2 Adopting the general rulings system for indirect taxes and
excise 33
Chapter 3 Tax invoices 51
Index 63
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|ABN |Australian Business Number |
|ATO |Australian Taxation Office |
|BAS |business activity statement |
|Commissioner |Commissioner of Taxation |
|Excise Act |Excise Act 1901 |
|GST |goods and services tax |
|GST Act |A New Tax System (Goods and |
| |Services Tax) Act 1999 |
|GST Regulations |A New Tax System (Goods and |
| |Services Tax) Regulations |
| |1999 |
|ITAA 1997 |Income Tax Assessment Act |
| |1997 |
|LCT |luxury car tax |
|TAA 1953 |Taxation Administration Act |
| |1953 |
|WET |wine equalisation tax |
General outline and financial impact
GST groups and GST joint ventures
Schedule 1 to this Bill amends:
. the A New Tax System (Goods and Services Tax) Act 1999
(GST Act) and the Taxation Administration Act 1953
(TAA 1953) to allow entities to self assess their
eligibility to form, change and dissolve a goods and
services tax (GST) group or GST joint venture and to do so
at any time during a tax period; and
. the TAA 1953 and the GST Act to allow members of a GST
group and participants in a GST joint venture to enter
into an indirect tax sharing agreement with a
representative member or a joint venture operator
respectively in relation to their indirect tax law
liabilities.
Date of effect: These amendments apply to tax periods starting on
or after 1 July 2010.
Proposal announced: This measure was announced in the then
Assistant Treasurer and Minister for Competition Policy and
Consumer Affairs' Media Release No. 042 of 12 May 2009.
Financial impact: The self assessment and intra-tax period
grouping and de-grouping amendments will have nil impact on
revenue. The indirect tax sharing agreements amendments will have
a negligible cost to GST revenue.
Compliance cost impact: These amendments are expected to result in
a low overall compliance cost impact, comprised of a low
implementation impact and a low decrease for ongoing compliance
costs relative to the affected group.
Adopting the general rulings system for indirect taxes and excise
Schedule 2 to this Bill amends the Taxation Administration Act
1953, the A New Tax System (Goods and Services Tax) Act 1999, the
Excise Act 1901 and the Income Tax Assessment Act 1997 to include
indirect tax rulings and excise advice in the general rulings
regime.
Date of effect: These amendments apply to rulings made by the
Commissioner of Taxation on or after 1 July 2010. They also apply
to private indirect tax rulings that have been applied for, or that
are in operation immediately before 1 July 2010, and public
indirect tax rulings that are gazetted or labelled as public
rulings and are in operation immediately before 1 July 2010.
Proposal announced: These amendments were announced in the then
Assistant Treasurer and Minister for Competition Policy and
Consumer Affairs' Media Release No. 042 of 12 May 2009.
Financial impact: These amendments will have an unquantifiable,
but expected to be small impact on the goods and services tax, the
wine equalisation tax, the luxury car tax and excise revenue.
Compliance cost impact: Low; the change brings the treatment of
indirect tax and excise rulings into line with the existing rules
for the broader rulings regime.
Tax invoices
Schedule 3 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 to simplify the requirements for a document
to be a tax invoice.
Date of effect: These amendments apply from 1 July 2010.
Proposal announced: These amendments were announced in the then
Assistant Treasurer and Minister for Competition Policy and
Consumer Affairs' Media Release No. 042 of 12 May 2009.
Financial impact: These amendments have an unquantifiable, but
expected to be small, cost to annual goods and services tax
revenue.
Compliance cost impact: Low. These amendments reduce compliance
costs by eliminating the need to seek further documents for many
minor omissions in tax invoices. However, only a limited number of
taxpayers are affected as only a small proportion of the total
number of tax invoices issued contain such errors.
These amendments also have a minimal transitional impact. No
changes to existing systems or behaviour are required.
Chapter 1
GST groups and GST joint ventures
Outline of chapter
1. Schedule 1 to this Bill amends:
. the A New Tax System (Goods and Services Tax) Act 1999
(GST Act) and the Taxation Administration Act 1953
(TAA 1953) to allow entities to self assess their
eligibility to form, change and dissolve a goods and
services tax (GST) group or GST joint venture and to do so
at any time during a tax period; and
. the TAA 1953 and the GST Act to allow members of a GST
group and participants in a GST joint venture to enter
into an indirect tax sharing agreement with a
representative member or a joint venture operator
respectively in relation to their indirect tax law
liabilities.
Context of amendments
2. This measure is implemented in response to Recommendation 32 of the
Board of Taxation's Review of the Legal Framework for the
Administration of the Goods and Services Tax.
3. The GST Act allows entities that choose to form a GST group or a
GST joint venture to apply special rules for reporting their GST
liabilities and entitlements, and to ignore most intra-group
transactions. In general terms, the special rules effectively
result in treating GST groups and, to a lesser extent, GST joint
ventures, as if they were a single entity for GST purposes
(Divisions 48 and 51). GST groups and GST joint ventures are also
recognised as one entity for the purposes of the wine equalisation
tax (Division 21 of the A New Tax System (Wine Equalisation Tax)
Act 1999), the luxury car tax (Division 16 of the A New Tax System
(Luxury Car Tax) Act 1999) and fuel tax credits (sections 70-05 and
70-15 of the Fuel Tax Act 2006).
4. To form a GST group, entities must obtain approval from the
Commissioner of Taxation (Commissioner) (section 48-5). The
application for approval must be made jointly by all the entities
concerned and must nominate one of them as a representative member
of the group. The Commissioner must approve a GST group if each of
the entities satisfies the membership requirements for that GST
group and the nominated representative member is an Australian
resident. Changes to the group membership, a change in the
representative member or a revocation of a GST group also requires
the Commissioner's approval. The application for such approval
must be made by the representative member (subsections 48-70(1) and
48-75(1)). When a member or a group no longer meets the membership
requirements, the representative member must notify the
Commissioner of this (section 48-80) and the Commissioner must
revoke the approval of such a member and a GST group (subsections
48-70(2) and 48-75(2)). Entities can only form, alter or revoke a
GST group from the beginning of a tax period (subsection 48-85(3)),
except when entities pay GST by instalments, or report and pay GST
annually (subsection 48-85(3)).
5. If an entity becomes incapacitated, its tax period ends at that
time under section 27-39. This will generally result in the entity
having a different tax period to those applying to other members of
the GST group, and therefore in that entity failing to meet the
membership requirements of that GST group. The representative
member may elect to have the tax periods that apply to other group
members cease at the same time as the incapacitated entity's tax
period ceases (section 48-73). An incapacitated entity cannot be
the representative member of the GST group unless all the members
of the group are incapacitated (section 48-72).
6. To form a GST joint venture, entities must obtain the
Commissioner's approval (section 51-5). The application for
approval must be made jointly by all the entities concerned and
must nominate one of them, or another entity, as the joint venture
operator of the joint venture. The Commissioner must approve a GST
joint venture if the joint venture is for approved purposes, the
joint venture is not a partnership and each of the entities
satisfies the participation requirements for that GST joint
venture. Changes to the joint venture membership, a change in the
joint venture operator or a revocation of a GST joint venture also
require the Commissioner's approval. The application for such
approval must be made by the joint venture operator (subsections 51-
70(1) and 51-75(1)). When a participant or a joint venture no
longer meets the participation requirements, the joint venture
operator must notify the Commissioner of this (section 51-80) and
the Commissioner must revoke the approval of such a participant or
a GST joint venture (subsections 51-70(2) and 51-75(2)). Entities
can only form, alter or revoke a GST joint venture from the
beginning of a tax period (section 51-85(2)).
7. Each member of a GST group or participant of a GST joint venture is
jointly and severally liable to pay any amount that is payable
under an indirect tax law by the representative member or the joint
venture operator respectively, in the event that they default on
the payment (sections 444-90 and 444-80 in Schedule 1 to the TAA
1953). An 'indirect tax law' is defined in the Income Tax
Assessment Act 1997 as any of the following - the GST law, the wine
equalisation tax law, the luxury car tax law and the fuel tax law.
8. The existing provisions add to compliance costs and constrain the
flexibility of entities in conducting their businesses. In
particular: the time taken to obtain an approval from the
Commissioner can result in uncertainty; allowing grouping and de-
grouping only at the beginning of a tax period may delay commercial
transactions or require the unwinding of transactions for GST
purposes to the beginning of a tax period; and finally joint and
several liability can give rise to ongoing uncertainty for
entities, even after they leave a GST group or GST joint venture.
Summary of new law
Self assessment and intra-tax period grouping and de-grouping
GST groups
9. Schedule 1 amends Division 48 of the GST Act to allow entities to
self assess their eligibility to form, change and dissolve a GST
group and to notify the Commissioner of details of the GST group in
the approved form. Under the amendments, entities will be able to
form, change and dissolve a GST group, and change a representative
member on any day during a tax period. The representative member
of the group must notify the Commissioner of the details of the GST
group on or before the day by which the representative member is
required to give to the Commissioner a GST return for the tax
period in which the formation, change or dissolution takes effect.
10. If the representative member fails to notify the Commissioner of
the details of the GST group by the relevant date, the
representative member will need to apply to the Commissioner for
approval of the date of effect of the formation, change in
membership, or dissolution of a GST group or a change in the
representative member.
11. Transitional rules provide for the treatment of GST groups that
already exist or that have already been approved by the
Commissioner under the amended provisions. Transitional rules also
provide for the treatment of applications made under the existing
provisions that have not been dealt with by the Commissioner.
GST joint ventures
12. Similarly, Schedule 1 amends Division 51 of the GST Act to allow
entities to self assess their eligibility to form, change and
dissolve a GST joint venture and to notify the Commissioner of
details of the GST joint venture in an approved form. Under the
amendments entities will be able to form, change and dissolve a GST
joint venture, and change a joint venture operator on any day
during a tax period. The joint venture operator must notify the
Commissioner of the details of the GST joint venture on or before
the day by which the joint venture operator is required to give to
the Commissioner a GST return for the tax period in which the
formation, change or dissolution takes effect.
13. If the joint venture operator fails to notify the Commissioner of
the details of the GST joint venture by the relevant date, the
joint venture operator will need to apply to the Commissioner for
approval of the date of effect of the formation, change in
participants or dissolution of a GST joint venture, or a change in
the joint venture operator.
14. Transitional rules provide for the treatment of GST joint ventures
that already exist or that have already been approved by the
Commissioner under the amended provisions. Transitional rules also
provide for the treatment of applications made under the existing
provisions that have not been dealt with by the Commissioner.
Indirect tax sharing agreements
GST groups
15. Schedule 1 also amends the TAA 1953 to allow members and a
representative entity of a GST group to enter into an indirect tax
sharing agreement to limit the indirect tax law liabilities of the
members for tax periods in which they are a member of a GST group.
Subject to certain conditions, a member with an indirect tax
sharing agreement can also leave a GST group clear of any indirect
tax law liabilities for a tax period if it leaves before the
representative member is required to give a GST return to the
Commissioner for the tax period.
GST joint ventures
16. Similarly, Schedule 1 amends the TAA 1953 to allow participants and
the joint venture operator of a joint venture to enter into an
indirect tax sharing agreement to limit the indirect tax law
liabilities of the participants for tax periods in which they are a
participant in the GST joint venture. Subject to certain
conditions, a participant with an indirect tax sharing agreement
can also leave a GST joint venture clear of any indirect tax law
liabilities for a tax period if it leaves before the joint venture
operator is required to give a GST return to the Commissioner for
the tax period.
Comparison of key features of new law and current law
|New law |Current law |
|Assessment of eligibility|Assessment of eligibility|
|to group |to group |
|GST groups |GST groups |
|Entities self assess |Entities need to obtain |
|their eligibility to |the Commissioner's |
|form, change and dissolve|approval for forming, |
|a GST group, change the |altering and revoking a |
|representative member and|GST group and for |
|notify the Commissioner |changing the |
|accordingly. However, |representative member. |
|failure to notify by the |GST joint ventures |
|prescribed date means |Entities need to obtain |
|that formation, change or|the Commissioner's |
|dissolution of a GST |approval for forming, |
|group or change of |altering and revoking a |
|representative member |GST joint venture and for|
|requires the Commissioner|changing the joint |
|to approve the date of |venture operator. |
|effect. | |
|GST joint ventures | |
|Entities self assess | |
|their eligibility to | |
|form, change and dissolve| |
|a GST joint venture, | |
|change the joint venture | |
|operator and notify the | |
|Commissioner accordingly.| |
|However, failure to | |
|notify by the prescribed | |
|date means that | |
|formation, change or | |
|dissolution of a GST | |
|joint venture or change | |
|of the joint venture | |
|operator requires the | |
|Commissioner to approve | |
|the date of effect. | |
|Date of effect of a group|Date of effect of a group|
| | |
|GST groups |GST groups |
|Entities can form, change|The date of effect of the|
|and dissolve a GST group,|Commissioner's approval |
|and change the |for forming, altering or |
|representative member, on|revoking a GST group or |
|any day during a tax |for changing the |
|period. |representative member |
|GST joint ventures |must be the beginning of |
|Entities can form, change|a tax period. |
|and dissolve a GST joint |GST joint ventures |
|venture, and change the |The date of effect of the|
|joint venture operator, |Commissioner's approval |
|on any day during a tax |for forming, altering or |
|period. |revoking a GST joint |
| |venture or for changing |
| |the joint venture |
| |operator must be the |
| |beginning of a tax |
| |period. |
|Liabilities of a group |Liabilities of a group |
|GST groups |GST groups |
|Members of a GST group |Each member of a GST |
|can enter into an |group is jointly and |
|indirect tax sharing |severally liable for any |
|agreement with the |amount that is payable |
|representative member in |under an indirect tax law|
|relation to their |by the representative |
|indirect tax law |member. |
|liabilities. |GST joint ventures |
|GST joint ventures |Each participant in a GST|
|Participants in a GST |joint venture is jointly |
|joint venture can enter |and severally liable for |
|into an indirect tax |any amount that is |
|sharing agreement with |payable under an indirect|
|the joint venture |tax law by the joint |
|operator in relation to |venture operator to the |
|their indirect tax law |extent that the amount |
|liabilities. |relates to the joint |
| |venture. |
Detailed explanation of new law
Self assessment and intra-tax period grouping and de-grouping
17. These amendments allow entities to self assess their eligibility to
form a GST group and a GST joint venture, and to make membership
changes to, or dissolve a GST group or a GST joint venture on any
day during a tax period. These amendments are aimed at reducing
compliance costs and increasing the flexibility for entities to
form, change and dissolve a GST group or a GST joint venture while
preserving the integrity of the GST system.
GST groups
18. To form a GST group, entities must satisfy the membership
requirements of a GST group, agree in writing to form a GST group
and nominate a representative member (which has to be an Australian
resident). Entities can self assess to form a GST group from a
particular date provided that the representative member notifies
the formation to the Commissioner in the approved form on or before
the day by which the representative member is required to give the
Commissioner a GST return for the tax period in which the formation
takes effect (prospective formation). [Schedule 1, item 3,
subsections 48-5(1) to (3)]
1. : Prospective formation of a GST group -- notifying the
Commissioner
Entity A has a 90 per cent stake in Entities B, C and D.
They are all companies that are registered for GST purposes,
apply the monthly GST tax period, account for GST on the
same basis, are not members of another GST group and do not
have any branch registered for GST purposes. Entities A, B,
C and D agree in writing to form a GST group with a date of
effect from 23 April 2011. They nominate Entity A (which is
an Australian resident for GST purposes) as the
representative member. Entity A notifies the Commissioner
in the approved form of their decision to form a GST group
and the details of the group membership on 27 April 2011.
These entities have formed a GST group (under section 48-5
of the GST Act) with a date of effect from 23 April 2011 as
the notification was provided to the Commissioner before
21 May 2011, which is the due date for lodgment of the GST
return for the April tax period.
19. The Commissioner can approve the formation of a GST group for a tax
period in which the due date for lodgment of a GST return by the
nominated representative member has already passed (retrospective
formation). To form a group with retrospective formation, the
representative member needs to apply to the Commissioner in the
approved form and the Commissioner has to approve the date of
effect and notify the representative member of the decision. The
Commissioner may decide to determine another date of effect. The
decision to approve another date of effect is a reviewable
decision. [Schedule 1, item 3, subsection 48-5(4) and item 16,
subsections 48-71(1) and (3)]
1. : Retrospective formation of a GST group - approval by the
Commissioner
Same facts as in Example 1.1 but the nominated
representative member (Entity A) notifies the Commissioner
of their decision to form a GST group on 22 May 2011. In
this case, the entities cannot self assess their eligibility
to form a GST group with a date of effect from
23 April 2011. This is because Entity A did not notify the
Commissioner about forming a GST group on or before
21 May 2011; that is, on or before the due date for lodgment
of a GST return for the April tax period. The Commissioner
therefore needs to approve the date of effect of the
formation of the group. The Commissioner approves
23 April 2011 as the day of the formation of the GST group
and gives a notice to the representative entity of the
decision. Thus a GST group is formed with a date of effect
from 23 April 2011 under section 48-5.
20. A member of a GST group is defined as an entity that either formed
a GST group or joined (and has not subsequently left) the group and
that satisfies the membership requirements of the group. [Schedule
1, item 3, subsections 48-7(1) and (2)]
21. The representative member must notify the Commissioner in the
approved form within 21 days if a member of the GST group no longer
satisfies the membership requirements. The failure to notify the
Commissioner within 21 days may result in an administrative penalty
under section 286-75 in Schedule 1 to the TAA 1953. [Schedule 1,
item 3, subsections 48-7(3) and (4)]
22. Changes can be made to a GST group by the representative member
notifying the Commissioner in the approved form of the changes.
The changes have effect from the date specified in the notice,
providing the notice is given to the Commissioner on or before the
day by which the representative member of the group is required to
give the Commissioner a GST return for the tax period in which such
actions take effect. The changes include an entity joining a GST
group, a member or the representative member leaving a GST group,
the representative member of the GST group being replaced by
another member of the group and the GST group being dissolved.
[Schedule 1, item 16, subsections 48-70(1) and (3)]
23. If an entity ceases to be the representative member, the GST group
is taken to be dissolved unless another member of the group
immediately becomes the representative member. A notice that
another member has become the representative member must be given
to the Commissioner by the new representative member within 21 days
after that member became the representative member. A failure to
notify the Commissioner within 21 days may result in an
administrative penalty under section 286-75 in Schedule 1 to the
TAA 1953. [Schedule 1, item 16, subsections 48-70(6) and (7)]
24. The Commissioner can approve a change in the membership of the GST
group, a replacement of the representative member of the GST group
or dissolution of a GST group retrospectively if the notification
occurs after the due date for lodgment of the GST return for the
tax period in which the action takes effect. To make changes to a
group with a retrospective date of effect, the representative
member needs to apply to the Commissioner in the approved form and
the Commissioner has to approve the date of effect and notify the
representative member of the decision. The Commissioner may decide
to determine another date of effect. The decision to approve
another date of effect is a reviewable decision. [Schedule 1, item
16, subsection 48-70(4) and subsections 48-71(1) and (3)]
25. The date of effect of forming, changing and dissolving a GST group,
whether by self assessment or with the Commissioner's approval can
be any day during a tax period. The existing requirements
concerning approvals and revocations of GST groups in sections 48-
75 to 48-90 are repealed. [Schedule 1, item 20]
26. The GST payable on a taxable supply and the entitlement to an input
tax credit for a creditable acquisition that an entity makes, that
is attributed to a tax period in which an entity is a member of a
GST group, is respectively payable by, or creditable to, the
representative member. Similarly, an adjustment that an entity has
and that is attributable to a tax period during which the entity is
a member of a GST group, is the representative member's adjustment.
A GST liability for a taxable importation arises in the tax period
that the taxable importation is made. If that importation is made
when the entity is a member of the group, the GST is payable by the
representative member (provided that the GST on the importation is
payable when GST on taxable supplies is normally payable by the
representative member). [Schedule 1, item 6, subsection 48-40(1),
item 7, paragraph 48-40(1)(b), item 8, subsection 48-40(1), item 9,
subsection 48-45(1), item 10, paragraph 48-45(1)(b), item 11,
subsection 48-45(2), item 12, subsection 48-50(1) and item 13,
paragraph 48-50(1)(a)]
27. However, if an entity is a member of a GST group for only part of
the tax period, the periods in which it was not a member of a group
are treated as if they were a tax period applying to the entity for
the purposes of working out which amounts the entity is liable for
or entitled to. Consequently, the entity is liable to pay any GST
on taxable supplies, is entitled to any input tax credits for
creditable acquisitions or creditable importations, and has
adjustments to the extent that these amounts would be attributable
to the period (or periods) in which the entity was not a member of
any GST group. GST on importations is payable by the entity if the
GST liability arose in that period. [Schedule 1, item 14,
section 48-51]
28. Similarly, the representative member of a GST group of which an
entity is only a member for part of a tax period is only
responsible for the liabilities and entitlements that arise for
transactions undertaken by the entity to the extent that these
would be attributable to the period in which the entity was a
member of the GST group (if this were a tax period). [Schedule 1,
item 14, section 48-52]
29. If there are two or more representative members of a GST group for
a tax period, each representative member is only liable for, or
entitled to, amounts that would be attributable to the period in
which it was the representative member (as if this period was
treated as a tax period). [Schedule 1, item 14, section 48-53]
30. Diagram 1.1 illustrates the responsibilities for accounting and
reporting for GST by the entities forming and leaving a GST group
as well as the representative member of a GST group.
1. : Intra-tax period formation and alteration of a GST group and
accounting for GST in a business activity statement
[pic]
In Diagram 1.1, Entities A, B and C form a GST group on 15
April with Entity B becoming the representative member of
the group. In these circumstances, each entity will be
required to lodge a business activity statement for the tax
period ending on 30 April, with:
. the representative member (Entity B) accounting for its own
liabilities and entitlements from 1 April to (the end of) 14
April and the GST group's liabilities and entitlements for
the period from (the start of) 15 April to 30 April; and
. Entity A and Entity C accounting for their own liabilities
and entitlements from 1 April to (the end of) 14 April.
Further, the membership of the ABC GST group is altered on
20 June when Entity A leaves the group. This will require:
. the representative member (Entity B) to account for the
liabilities and entitlements of the GST group for the
whole of the tax period, including Entity A's activities
up to (the start of) 20 June, in its business activity
statement for the tax period ending on 30 June; and
. Entity A accounts for its own liabilities and entitlements
from the start of 20 June to 30 June.
31. The Commissioner may revoke an approval for a retrospective
formation, a retrospective change in the membership of a GST group,
a retrospective replacement of the representative member or a
retrospective dissolution of a GST group. The Commissioner must
notify the relevant entity of any decision and the decision is a
reviewable decision. [Schedule 1, item 16, subsections 48-71(2)
and (3)]
32. If a member becomes an incapacitated entity, and as a result the
tax periods that apply to it are different from the members of the
GST group, it ceases to be a member of the GST group unless the
representative member makes an election for the tax period that
applies to the members of the GST group to end at the same time as
the incapacitated entity became incapacitated. The Commissioner
must be notified about such an election within 21 days after the
member becomes incapacitated. [Schedule 1, item 19, subsections 48-
73(1A) and (1B)]
33. A representative of an incapacitated entity may remove an
incapacitated entity from a GST group by notifying the Commissioner
in the approved form that the incapacitated entity is no longer a
member of the GST group. The representative of an incapacitated
entity needs to seek the Commissioner's approval of such action if
the notification occurs after the due date for lodgment of the GST
return for that tax period. However, the date of effect cannot be
earlier than the day on which the member of the group became
incapacitated. [Schedule 1, item 16, paragraphs 48-70(1)(e) and
(2)(c), and subsections 48-70(4) and (5)]
34. If a representative member becomes an incapacitated entity, it
ceases to be the representative member of a GST group unless all
other members of the GST group are also incapacitated entities.
[Schedule 1, item 20, section 48-75]
35. An entity with a tax period determined by the Commissioner under
section 27-30 of the GST Act will satisfy the membership
requirements for joining a GST group despite not immediately having
the same tax period as other members of the GST group, if the tax
period determined by the Commissioner ends at the same time as the
tax period for the other members of the group and this tax period
is not longer than the tax period for the other members of the
group (other than a tax period that another member has under
section 27-30). [Schedule 1, item 4, subsection 48-10(2A)]
GST joint ventures
36. To form a GST joint venture, entities must satisfy the
participation requirements of a GST joint venture, agree in writing
to form a GST joint venture and nominate a joint venture operator.
The joint venture operator does not need to be a joint venture
participant. Entities can self assess to form a GST joint venture
from a particular date provided that the joint venture operator
notifies the formation to the Commissioner in the approved form on
or before the day by which the joint venture operator is required
to give the Commissioner a GST return for the tax period in which
the formation takes effect (prospective formation). [Schedule 1,
item 23, item 24, subsection 51-5(1), item 25, item 26,
paragraph 51-5(1)(e), item 27, subsection 51-5(1), and item 28,
subsections 51-5(2) and (3)]
37. The Commissioner can approve the formation of a GST joint venture
for a tax period in which the due date for lodgment of a GST return
by the joint venture operator has already passed (retrospective
formation). To form a joint venture with retrospective formation,
the Commissioner has to approve the date of effect and notify the
joint venture operator of the decision. The Commissioner may
decide to determine another date of effect. The decision to
approve another date of effect is a reviewable decision. [Schedule
1, item 28, subsection 51-5(4) and item 31, subsections 51-75(1)
and (3)]
38. A participant in a joint venture is defined as an entity that
either formed a GST joint venture or joined (and has not
subsequently) left the joint venture and that satisfies the
participation requirements of the joint venture. [Schedule 1, item
29, subsections 51-7(1) and (2)]
39. The joint venture operator must notify the Commissioner in the
approved form within 21 days if a participant in the GST joint
venture no longer satisfies the participation requirements. A
failure to notify the Commissioner within 21 days may result in an
administrative penalty under section 286-75 in Schedule 1 to the
TAA 1953. [Schedule 1, item 29, subsections 51-7(3) and (4)]
40. Changes can be made to a GST joint venture by the joint venture
operator notifying the Commissioner in the approved form of the
changes. The changes have effect from the date specified in the
notice, providing the notice is given to the Commissioner on or
before the day by which the joint venture operator is required to
give the Commissioner a GST return for the tax period in which such
actions take effect. The changes include an entity joining a GST
joint venture, a member leaving a GST joint venture, the joint
venture operator being replaced by another entity and the GST joint
venture being dissolved. [Schedule 1, item 31, subsections 51-
70(1) and (2)]
41. If an entity ceases to be the joint venture operator, the GST joint
venture is taken to be dissolved unless another participant in the
joint venture immediately becomes the joint venture operator. A
notice that another joint venture participant has become the joint
venture operator must be given to the Commissioner by the new joint
venture operator within 21 days after that entity became the joint
venture operator. The failure to notify the Commissioner within
21 days may result in an administrative penalty under section 286-
75 in Schedule 1 to the TAA 1953. [Schedule 1, item 31,
subsections 51-70(4) and (5)]
42. The Commissioner can approve a change in the participants in a GST
joint venture, a replacement of the joint venture operator or a
dissolution of the GST joint venture retrospectively. The approval
of the Commissioner is required when the joint venture operator
notifies the Commissioner of the action after the due date for
lodgment of the GST return for the tax period in which the action
takes effect. To make changes to a joint venture with a
retrospective date of effect, the joint venture operator needs to
apply to the Commissioner in the approved form and the Commissioner
has to approve the date of effect and notify the joint venture
operator of the decision. The Commissioner may decide to determine
another date of effect. The decision to approve another date of
effect is a reviewable decision. [Schedule 1, item 31, subsection
51-70(3), and subsections 51-75(1) and (3)]
43. The date of effect of forming, changing and dissolving a GST joint
venture, whether by self assessment or with the Commissioner's
approval, can be any date during a tax period. The existing
requirements in Subdivision 51-C dealing with approvals or
revocations are repealed. [Schedule 1, item 31]
44. The Commissioner may revoke an approval for a retrospective
formation, a retrospective change in the participants in the GST
joint venture, a retrospective replacement of the joint venture
operator or a retrospective dissolution of the GST joint venture.
The Commissioner must notify the relevant entity of any decision
and the decision is a reviewable decision. [Schedule 1, item 31,
subsections 51-75(2) and (3)]
Indirect tax sharing agreements
45. The amendments allow participants of a GST joint venture and
members of a GST group to enter into an indirect tax sharing
agreement with their joint venture operator and representative
member respectively in relation to their indirect tax law
liabilities. These amendments are aimed at reducing compliance
costs by increasing certainty.
46. A supply that is made by an entity because it enters into an
indirect tax sharing agreement or a supply of a release from an
obligation under an indirect tax sharing agreement is not a taxable
supply. [Schedule 1, items 54 and 55, sections 110-60 and 110-65]
GST joint ventures
47. Joint venture participants can enter into an indirect tax sharing
agreement with the joint venture operator to limit their exposure
to joint and several liability for the joint venture operator's
indirect tax liability for a tax period. The indirect tax sharing
agreement can limit their liability to an amount (the contribution
amount) determined in accordance with its terms.
48. An indirect tax sharing agreement must be in force before the date
on which the joint venture operator is required to give to the
Commissioner a GST return for a tax period and under the indirect
tax sharing agreement a contribution amount must be able to be
determined for each contributing participant for that tax period.
The contribution amounts of each contributing participant under the
indirect tax sharing agreement must represent a reasonable
allocation of the total indirect tax amounts that the participants
would be jointly and severally liable for in relation to that tax
period (that is, an amount comprising the sum of the joint venture
operator's net amount for the tax period, the joint venture's net
fuel amount for the tax period and any other tax-related
liabilities that arise under an indirect tax law during the tax
period, such as GST payable on taxable importations that the joint
venture operator is liable to pay) to the extent that the amounts
in question relate to the joint venture.
49. The requirement to allocate the joint venture operator's total
indirect tax law liability between the contributing participants
and the joint venture operator provides joint venture participants
with the flexibility to determine an appropriate basis of
allocation that suits the circumstances of the GST joint venture.
Participants are not, for example, restricted to adopting a
methodology which allocates liability amounts for each separate
indirect tax law to each participant (that is, the GST, wine
equalisation tax, luxury car tax and fuel tax laws) although they
may choose to do this provided that the allocation of the total
liability is reasonable. [Schedule 1, items 56 and 57,
subsection 444-80(1) and item 58, paragraphs 444-80(1A)(a) to (c)]
50. To provide additional assurance to the business community, the
Commissioner will publish guidelines as to what is considered to be
a reasonable allocation of a GST joint venture operator's total
indirect tax law liability under an indirect tax sharing agreement.
51. The effect of the indirect tax sharing agreement provisions is to
limit the liability of a participant in the event that a joint
venture operator defaults on the payment of a joint venture's
indirect tax law liability for a tax period. While the joint
venture operator may also have a (nominal) allocation under the
indirect tax sharing agreement, it remains liable to pay the total
amount of the indirect tax law liability of the GST joint venture
for a tax period in respect of which it was the joint venture
operator.
52. A participant with a relevant indirect tax sharing agreement can
leave a GST joint venture clear of any liability for a tax period,
if before the day on which the joint venture operator is required
to give to the Commissioner the relevant GST return for the tax
period, the participant pays the joint venture operator its
contribution amount for that period, or if that amount cannot be
determined at the time of payment, a reasonable estimate of its
contribution amount. [Schedule 1, item 58, paragraph 444-80(1A)(d)
and subsection 444-80(1B)]
53. The liability of participants with a relevant indirect tax sharing
agreement that have not left the GST joint venture is limited to
the contribution amount determined in accordance with the indirect
tax sharing agreement. A subsequent payment made by a participant
to the Commissioner will reduce its contribution amount and the GST
joint venture's indirect tax liability to the extent of the
payment. However, this payment will not affect the Commissioner's
ability to recover the joint venture's outstanding liabilities from
other participants to the extent of their contribution amounts.
[Schedule 1, item 58, paragraph 444-80(1A)(e)]
1. : GST joint venture and indirect tax sharing agreements
Entities A, B, C, D and E formed a GST joint venture on
5 February 2011. A is nominated as the joint venture
operator and thus is responsible for the indirect tax law
liabilities of the GST joint venture, but B, C, D and E are
jointly and severally liable for any amount that is payable
under an indirect tax law by the joint venture operator (to
the extent that the amount relates to the joint venture).
The GST joint venture applies a monthly tax period for
remitting its indirect tax law liabilities. On 10 April
2011, B, C, D and E enter into an indirect tax sharing
agreement with Entity A in respect of the April 2011 tax
period. On 21 May 2011, A defaults on the payment to the
Commissioner of amounts that are payable for the April 2011
tax period in respect of the GST joint venture's indirect
tax law liabilities. Entities B, C, D and E are jointly and
severally liable for the GST joint venture's indirect tax
law liabilities. However, as they have a valid indirect tax
sharing agreement for the tax period their liabilities are
limited to their respective contribution amounts determined
in accordance with the indirect tax sharing agreement.
Entity A remains wholly liable for the total amounts that
are payable for the GST joint venture.
If Entity B left the GST joint venture on 20 May 2011 and
made a payment to A of its contribution amount for both the
April 2011 tax period and the May 2011 tax period, it is
clear of any indirect tax law liabilities for the April 2011
and May 2011 tax periods. Entities C, D and E are jointly
and severally liable for the GST joint venture operator's
indirect tax law liabilities for these tax periods to the
extent that the liabilities relate to the joint venture,
with their liabilities being limited to their contribution
amounts determined in accordance with the indirect tax
sharing agreement.
54. More details about the operation of indirect tax sharing agreements
can be found in Diagram 1.2 that illustrates the operation of
indirect tax sharing agreements in respect of the indirect tax law
liabilities of a GST group.
55. An indirect tax sharing agreement does not apply if it was entered
into as part of an arrangement that had a purpose of prejudicing
the Commissioner's ability to recover an amount payable under an
indirect tax law. [Schedule 1, item 58, subsection 444-80(1C)]
56. In addition, an indirect tax sharing agreement does not apply if
the joint venture operator fails to comply with a written notice
given by the Commissioner requiring the joint venture operator to
give the Commissioner a copy of the indirect tax sharing agreement
in the approved form within 14 days. [Schedule 1, item 58,
subsection 444-80(1D)]
57. An indirect tax sharing agreement can cover more than one
participant in a joint venture but the joint venture operator for
the GST joint venture cannot enter into more than one indirect tax
sharing agreement for the same tax period. [Schedule 1, item 58,
subsection 444-80(1E)]
GST groups
58. Members of a GST group can enter into an indirect tax sharing
agreement with the representative member of the group to limit
their exposure to joint and several liability for the
representative member's indirect tax liability for a tax period.
The indirect tax sharing agreement can limit their liability to an
amount (the contribution amount) determined in accordance with its
terms.
59. An indirect tax sharing agreement must be in force before the date
on which the representative member of the group is required to give
to the Commissioner a GST return for a tax period and under the
indirect tax sharing agreement a contribution amount must be able
to be determined for each contributing member for that tax period.
The contribution amounts of each contributing member under the
indirect tax sharing agreement must represent a reasonable
allocation of the total indirect tax amounts that the members would
be jointly and severally liable for in relation to that tax period
(that is, an amount comprising the sum of the representative
member's net amount for the tax period, the representative member's
net fuel amount for the tax period and any other tax-related
liabilities that arise under an indirect tax law during the tax
period, such as GST payable on taxable importations, that the
representative member is liable to pay).
60. The requirement to allocate the representative member's total
indirect tax law liability provides group members with the
flexibility to determine an appropriate basis of allocation that
suits the circumstances of the GST group. Members are not, for
example, restricted to adopting a methodology which allocates
liability amounts for each separate indirect tax law to each member
(that is, the GST, wine equalisation tax, luxury car tax and fuel
tax laws) although they may choose to do this provided that the
allocation of the total liability is reasonable. [Schedule 1,
items 59 and 60, subsection 444-90(1) and item 61, paragraphs 444-
90(1A)(a) to (c)]
61. To provide additional assurance to the business community, the
Commissioner will publish guidelines as to what is considered to be
a reasonable allocation of a representative member's total indirect
tax law liability under an indirect tax sharing agreement.
62. The effect of the indirect tax sharing agreement provisions is to
limit the liability of a member in the event that a representative
member defaults on the payment of a group's indirect tax law
liabilities for a tax period. While the representative member may
also have a (nominal) allocation under the indirect tax sharing
agreement, it remains liable to pay the total amount of the
indirect tax law liability for a tax period of the GST group in
respect of which it was the representative member.
63. A member with a relevant indirect tax sharing agreement can leave a
GST group clear of any liability for an indirect tax amount for a
tax period, if before the day on which the representative member is
required to give to the Commissioner the GST group's GST return for
the tax period, the member pays the representative member its
contribution amount, or if that amount cannot be determined at the
time of payment, a reasonable estimate of its contribution amount.
[Schedule 1, item 61, paragraph 444-90(1A)(d) and subsection 444-
90(1B)]
64. The liability of members with a relevant indirect tax sharing
agreement that have not left the GST group before an indirect tax
amount becomes payable is limited to the contribution amount
determined in accordance with the indirect tax sharing agreement.
A subsequent payment made by a member to the Commissioner will
reduce its contribution amount and the GST group's liability to the
extent of the payment. However, this payment will not affect the
Commissioner's ability to recover the GST groups outstanding
liability from other members to the extent of their contribution
amounts. [Schedule 1, item 61, paragraph 444-90(1A)(e)]
65. Diagram 1.2 illustrates the intended outcome of these provisions in
respect of the liability of a member with an indirect tax sharing
agreement that leaves a GST group and the liabilities of the
remaining members of the GST group for an amount that is payable
under an indirect tax law.
66. An indirect tax sharing agreement does not apply if it was entered
into as part of an arrangement that had a purpose to prejudicing
the Commissioner's ability to recover an amount payable under an
indirect tax law. [Schedule 1, item 61, subsection 444-90(1C)]
67. In addition, an indirect tax sharing agreement does not apply if
the representative member fails to comply with a written notice
given by the Commissioner requiring the representative member to
give the Commissioner a copy of the indirect tax sharing agreement
in the approved form within 14 days. [Schedule 1, item 61,
subsection 444-90(1D)]
68. An indirect tax sharing agreement can cover more than one member of
a GST group but the representative member of the GST group cannot
enter into more than one indirect tax sharing agreement for the
same tax period. [Schedule 1, item 61, subsection 444-90(1E)]
1. : Indirect tax sharing agreement and indirect tax law liabilities
of GST group
[pic]
In Diagram 1.2, a GST group operates that consists of Entity
X (a representative member of the group), and Entities Y and
Z. Entity A joins this group mid-way through tax period 2
which is to be allowed under provisions covered by this Bill
and illustrated in Diagram 1.1.
The group members enter into an indirect tax sharing
agreement with the representative member of the GST group
(Entity X) at the same time and this occurs after the GST
return for tax period 1 is due. Entity A leaves the group
during tax period 5 (but after lodgment for period 4 is due)
after making a payment of its contribution amount to X under
the indirect tax sharing agreement with respect of period 5.
The contribution amount represents a reasonable allocation
of A's share of the representative member's total indirect
tax law liabilities that have not yet become payable for
period 5.
In this scenario, the representative member (X) is
responsible for the indirect tax law liabilities of the GST
group for the duration it was the representative member of
the group. However, if X defaults on the payment of the
indirect tax law liabilities of the GST group for tax
periods 1 to 7:
. Entity Y and Z are jointly and severally liable for the
amounts that are payable with respect of tax period 1 as
there is no applicable indirect tax sharing agreement;
. before Entity A leaves the group, Entities Y, Z and A are
jointly and severally liable for any amounts that are
payable for tax periods covered under the indirect tax
sharing agreement (tax periods 2, 3 and 4). However, their
liabilities are limited to their respective contribution
amounts determined under the indirect tax sharing agreement;
. after Entity A leaves the group and makes a payment under
the indirect tax sharing agreement to X:
- Entities Y and Z remain jointly and severally liable for the
indirect tax law liabilities of the GST group that arose in
a tax period prior to A leaving the group (tax periods 2, 3
and 4) as well as for the tax period in which A leaves the
group (tax period 5) and tax periods 6 and 7. However,
their liabilities are limited to their respective
contribution amounts determined under the indirect tax
sharing agreement;
- Entity A:
a. does not have any indirect tax law liabilities for the tax
period in which it leaves the GST group (tax period 5) as it
left prior to the date the representative member was
required to lodge a GST return for that period, and has made
a payment of its contribution amount in respect of that
period; and
b. remains liable for amounts payable under GST returns which
were required to be lodged at the time during which it was a
member of the GST group (tax periods 2, 3 and 4) but only to
the extent of its contribution amounts determined under the
indirect tax sharing agreement for those periods.
Regardless of whether X defaults or not, Entity A is
responsible for any increasing and decreasing adjustments
that are attributable to a period after it leaves the group
(for example, in tax period 7) but only in respect of
supplies and acquisitions that A made while it was a member
of the GST group (tax periods from 2 to 5).
Application and transitional provisions
69. The amendments made by Part 1 and Part 2 of Schedule 1 apply to tax
periods starting on or after 1 July 2010. [Schedule 1, items 45
and 63]
70. Transitional rules provide for the treatment of GST groups and GST
joint ventures that already exist or that have already been
approved by the Commissioner. They also provide for the treatment
of applications made under the existing provisions that have not
been dealt with by the Commissioner.
Self assessment: GST groups
71. A GST group that existed immediately before 1 July 2010 will be
taken to continue to exist under the new provisions for formation
of a GST group, provided that the entities who are members of the
GST group and the representative member of such a group before and
after 1 July 2010 remain the same. [Schedule 1, subitem 43(1)]
72. GST groups that have been approved by the Commissioner before 1
July 2010 with a date of effect after 1 July 2010 will not be
required to notify the Commissioner about the formation of the GST
group, unless there are changes to membership of the GST group or
the representative member. [Schedule 1, subitem 43(2)]
73. An application by entities to form a GST group with effect after 1
July 2010 that was not approved or refused by the Commissioner
before 1 July 2010 will be taken to be a notification of the
formation of the GST group under the amended provisions. [Schedule
1, subitem 43(3)]
74. An application by entities to form a GST group with effect before 1
July 2010 that was not approved or refused by the Commissioner
before 1 July 2010 will be taken to be an application for approval
to form the GST group under the amended provisions. [Schedule 1,
subitem 43(4)]
75. An application by a representative member to make changes to a GST
group with effect after 1 July 2010 that was not approved or
refused by the Commissioner before 1 July 2010 will be taken to be
a notification of the changes to the GST group under the amended
provisions. [Schedule 1, subitem 43(5)]
76. An application by a representative member to make changes to a GST
group with effect before 1 July 2010 that was not approved or
refused by the Commissioner before 1 July 2010 will be taken to be
an application for changes to the GST group under the amended
provisions. [Schedule 1, subitem 43(6)]
77. An application by a representative member to revoke a GST group
with effect after 1 July 2010 that was not approved or refused by
the Commissioner before 1 July 2010 will be taken to be a
notification of the revocation of the GST group under the amended
provisions. [Schedule 1, subitem 43(7)]
78. An application by a representative member to revoke a GST group
with effect before 1 July 2010 that was not approved or refused by
the Commissioner before 1 July 2010 will be taken to be an
application for approval of the revocation of the GST group under
the amended provisions. [Schedule 1, subitem 43(8)]
Self assessment: GST joint ventures
79. A GST joint venture that existed immediately before 1 July 2010
will be taken to continue to exist under the new provisions for
formation of a GST joint venture, provided that the entities who
participate in the GST joint venture and the joint venture operator
of such a GST joint venture before and after 1 July 2010 remain the
same. [Schedule 1, subitem 44(1)]
80. GST joint ventures that have been approved by the Commissioner
before 1 July 2010 with a date of effect after 1 July 2010 will not
be required to notify the Commissioner about the formation of the
GST joint venture, unless there are changes to membership of the
GST joint venture or the joint venture operator. [Schedule 1,
subitem 44(2)]
81. An application by entities to form a GST joint venture with effect
after 1 July 2010 that was not approved or refused by the
Commissioner before 1 July 2010 will be taken to be a notification
of the formation of the GST joint venture under the amended
provisions. [Schedule 1, subitem 44(3)]
82. An application by entities to form a GST joint venture with effect
before 1 July 2010 that was not approved or refused by the
Commissioner before 1 July 2010 will be taken to be an application
for approval to form the GST joint venture under the amended
provisions. [Schedule 1, subitem 44(4)]
83. An application by a joint venture operator to make changes to a GST
joint venture with effect after 1 July 2010 that was not approved
or refused by the Commissioner before 1 July 2010 will be taken to
be a notification of the changes to the GST joint venture under the
amended provisions. [Schedule 1, subitem 44(5)]
84. An application by a joint venture operator to make changes to a GST
joint venture with effect before 1 July 2010 that was not approved
or refused by the Commissioner before 1 July 2010 will be taken to
be an application for approval of the changes to the GST joint
venture under the amended provisions. [Schedule 1, subitem 44(6)]
85. An application by a joint venture operator to revoke a GST joint
venture with effect after 1 July 2010 that was not approved or
refused by the Commissioner before 1 July 2010 will be taken to be
a notification of the revocation of the GST joint venture under the
amended provisions. [Schedule 1, subitem 44(7)]
86. An application by a joint venture operator to revoke a GST joint
venture with effect before 1 July 2010 that was not approved or
refused by the Commissioner before 1 July 2010 will be taken to be
an application for approval of the revocation of the GST joint
venture under the amended provisions. [Schedule 1, subitem 44(8)]
Consequential amendments
Self assessment and intra-tax period grouping and de-grouping
87. As a consequence of introducing self assessment:
. Section 48-1 of the GST Act describing the content of
Division 48 and a heading of Subdivision 48-A are amended
to indicate that entities can form rather than be approved
as a GST group [Schedule 1, item 1, section 48-1 and item
2].
. The heading of Subdivision 48-B of the GST Act is amended
to refer to the consequences of GST groups rather than to
the consequences of approval of GST group [Schedule 1,
item 5].
. A note is inserted under subsection 48-60(1) of the GST
Act to indicate that if an entity is not a member of a GST
group during the whole tax period, it will still be
obligated to give a GST return for the tax period and that
the net amount for that tax period will take into account
its liabilities and entitlements relating to the part of
the tax period during which it was not a member of a group
[Schedule 1, item 15].
. Section 48-72 of the GST Act dealing with the effect of a
representative member becoming an incapacitated entity has
been deleted and replaced with a new section 48-75
[Schedule 1, item 17].
. Note 2 under subsection 48-73(1) of the GST Act was
amended to indicate that if a representative member does
not make an election for the tax period that applies to
the members of the GST group to end at the same time as a
member becomes incapacitated, the member's membership of
the group may cease on becoming incapacitated if the tax
periods that apply to it do not apply to other members
[Schedule 1, item 18].
. Section 51-1 of the GST Act describing the content of
Division 51 and the heading of Subdivision 51-A are
amended to indicate that entities can form rather than be
approved as a GST joint venture [Schedule 1, item 21,
section 51-1 and item 22].
. The heading of Subdivision 51-B of the GST Act is amended
to refer to the consequences of GST joint ventures rather
than to the consequences of approval of GST joint ventures
[Schedule 1, item 30].
. Subsection 58-10(6) of the GST Act is amended to reflect
the addition of a new subsection 48-40(1A) [Schedule 1,
item 32].
. Sections 151-65 and 151-70 and paragraph 151-25(1)(d) of
the GST Act are repealed and paragraph 151-25(1)(c) of the
GST Act is amended to ensure that an intra-tax period
alteration to a GST group or an intra-tax period change in
a representative member does not prevent a GST group from
continuing to lodge GST returns, and pay amounts of GST or
receive refunds of GST, on an annual tax basis [Schedule
1, item 33, paragraph 151-25(1)(c), item 34, paragraph 151-
25(1)(d) and item 35].
. A number of definitions in section 195-1 of the GST Act
are amended to reflect changes in the main provisions
dealing with GST groups (Division 48) and GST joint
ventures (Division 51) [Schedule 1, items 36 to 40].
. Subsection 110-50(2) in Schedule 1 to the TAA 1953 is
amended by deleting items relating to the Commissioner's
decision to refuse an application for approval to form,
change or dissolve a GST group and a GST joint venture
under the existing provisions and inserting items relating
to the Commissioner's decision to refuse to approve a
retrospective date of effect for forming, changing and
dissolving a GST group and a GST joint venture [Schedule
1, items 41 and 42].
Indirect tax sharing agreements
88. A note under subsection 48-40(1) of the GST Act that deals with the
GST liabilities of a GST group is amended to indicate that each
member may be, rather than is, jointly and severally liable to pay
GST that is payable by the representative member. A similar
amendment was made to a note under subsection 51-30(1) of the GST
Act that deals with the GST liabilities of a GST joint venture.
[Schedule 1, items 50 and 51]
89. A table in section 9-39 of the GST Act that specifies special rules
relating to taxable supplies is amended in the light of changes to
Division 110 making certain indirect tax sharing agreement related
transactions a non-taxable supply. Similar changes are made to the
checklist of special rules in section 37-1 of the GST Act.
[Schedule 1, items 46 to 49]
90. Section 110-1 of the GST Act describing the content of Division 110
and the heading of Division 110 are changed to indicate the
Division deals with income tax and other taxes, rather than just
income tax, following the amendment making indirect tax sharing
agreement related transactions a non-taxable supply. [Schedule 1,
items 52 and 53]
91. A subheading has been inserted before subsection 444-90(4) to
separate the remaining subsections dealing with criminal liability
from the preceding subsections dealing with joint and several
liability. [Schedule 1, item 62]
Chapter 2
Adopting the general rulings system for indirect taxes and excise
Outline of chapter
1. Schedule 2 to this Bill amends the Taxation Administration Act 1953
(TAA 1953), the A New Tax System (Goods and Services Tax) Act 1999
(GST Act), the Excise Act 1901 (Excise Act) and the Income Tax
Assessment Act 1997 (ITAA 1997) to include indirect tax rulings and
excise advice in the general rulings regime. All references are to
the TAA 1953 unless otherwise specified.
Context of amendments
2. Schedule 2 implements the Government's response to the Board of
Taxation's Review of the Legal Framework for the Administration of
the GST which recommended harmonising the indirect tax rulings
system with the general ruling system.
3. Under the current law, indirect tax rulings are issued under the
Commissioner of Taxation's (Commissioner) power of general
administration of indirect tax. Administratively binding advice
for excise is issued under the Commissioner's powers of general
administration. There is currently no express legislative
framework for indirect tax rulings and excise advice, and no formal
objection or review rights.
4. The intention of harmonising indirect tax rulings and excise advice
with the general rulings system is to simplify the tax law and
provide consistent rules that apply across different taxes.
Specific differences between the rulings regimes are retained only
where essential characteristics of the different taxes require a
different approach.
5. It is not intended that any changes be made to how the existing
rulings regime generally applies for taxes currently covered by
that regime. In addition, private indirect tax rulings in
operation immediately prior to 1 July 2010 are treated as if made
under the revised ruling regime. This ensures that the rulings
remain valid and do not impose additional compliance costs on
affected parties by requiring new rulings to be obtained. Indirect
tax rulings in operation immediately prior to 1 July 2010 that are
gazetted or labelled as public rulings are also treated as if made
under the revised ruling regime.
6. Given the concerns expressed during consultation, the Board of
Taxation's recommendation that one party to a supply be able to
rely on rulings issued to the other party to the supply has not
been implemented. However, adopting the broader rulings regime
means the Commissioner can issue class and product rulings
concerning indirect tax and excise. Suppliers and recipients can
also still apply jointly for private rulings.
Summary of new law
7. This Schedule broadens the scope of the general rulings system to
extend it to the goods and services tax (GST), the luxury car tax
(LCT), the wine equalisation tax (WET) and excise duty. This
ensures that, where possible, consistent rules for tax rulings
apply across different taxes.
8. This allows the Commissioner to issue public and private indirect
tax and excise rulings to taxpayers that are legally binding on the
Commissioner in relation to these taxes and excise duty. The
adoption of the general rulings regime for indirect tax and excise
duty introduces a range of features which include the right to
object to a private indirect tax or excise ruling.
9. The amendments apply to rulings made by the Commissioner on or
after 1 July 2010. They also apply to:
. private indirect tax rulings that have been applied for,
or are in operation, immediately before 1 July 2010; and
. public indirect tax rulings that are gazetted or labelled
as public rulings and are in operation immediately before
1 July 2010,
in order to reduce any transitional compliance costs resulting
from the changes.
Comparison of key features of new law and current law
|New law |Current law |
|Scope of indirect tax and|Scope of indirect tax and|
|excise ruling regimes |excise ruling regimes |
|Indirect tax and excise |No legislated rulings |
|rulings are included in |regime exists for |
|the general rulings |indirect tax or excise. |
|regime. |However, the indirect tax|
| |law sets out the |
| |consequences of changes |
| |to indirect tax rulings. |
| |GST, WET and LCT rulings |
| |are issued under the |
| |Commissioner's power of |
| |general administration of|
| |indirect tax laws. |
| |Only administratively |
| |binding advice is issued |
| |in relation to excise. |
| |The general rulings |
| |regime applies to income |
| |tax, fringe benefits tax,|
| |petroleum resource rent |
| |tax, fuel tax credits, |
| |the Medicare levy, mining|
| |withholding tax, franking|
| |tax and grants or |
| |benefits under the |
| |products grants |
| |legislation. |
|Objecting to rulings |Objecting to rulings |
|A right of objection |No objection right exists|
|exists for indirect tax |for indirect tax rulings.|
|and excise rulings | |
|consistent with the |In order to lodge an |
|general rulings regime. |objection, taxpayers are |
| |required to request an |
| |assessment of their net |
| |amount for the relevant |
| |tax period and object to |
| |that assessment. |
| |No objection right exists|
| |for administratively |
| |binding advice issued by |
| |the Commissioner |
| |concerning excise. |
|Withdrawing or replacing |Withdrawing or replacing |
|rulings |rulings |
|An indirect tax or excise|An indirect tax ruling |
|ruling applies until it |applies until it is |
|is withdrawn or replaced |withdrawn or replaced by |
|by the Commissioner, |the Commissioner, unless |
|unless the Commissioner |the Commissioner |
|otherwise provides an end|otherwise provides an end|
|date in the ruling. |date in the ruling. |
|Time a new ruling applies|Time a new ruling applies|
|from |from |
|A new or revised indirect|A new or revised indirect|
|tax or a new excise |tax ruling applies from |
|ruling applies from its |its date of release or |
|date of release or any |any other date set out in|
|other date set out in the|the ruling. |
|ruling. | |
|Reliance on a ruling |Reliance on a ruling |
|If a taxpayer relies on |There is uncertainty |
|an indirect tax or excise|about what is required to|
|ruling then the |demonstrate that a |
|Commissioner is legally |taxpayer has relied on a |
|bound to administer the |ruling, and thus receive |
|law in accordance with |protection from the |
|the ruling. |ruling. |
|Impact on GST input tax |Impact on GST input tax |
|credit |credit |
|No policy change. |If a taxpayer relies on a|
|However, the application |ruling from the |
|of the law is clarified. |Commissioner that a |
| |supply is either GST-free|
| |or input taxed, then no |
| |GST is payable by them on|
| |the supply. Accordingly,|
| |no input tax credit |
| |entitlement arises to the|
| |recipient of such a |
| |supply. |
|End dates for rulings |End dates for rulings |
|No end date applies to an|No end date applies to an|
|indirect tax or excise |indirect tax ruling |
|ruling unless specified |unless specified in the |
|in the ruling. |ruling. |
|Stopping relying on a |Stopping relying on a |
|ruling |ruling |
|Taxpayers can expressly |Taxpayers can stop |
|stop relying on an |relying on an indirect |
|indirect tax or excise |tax ruling or excise |
|ruling. |advice. |
|Oral rulings |Oral rulings |
|No change. |Oral rulings are not |
| |available on GST, LCT, |
| |WET or excise matters. |
|Public rulings |Public rulings |
|A public ruling is a |Public indirect tax |
|published written ruling |rulings include all forms|
|labelled as a public |of written advice |
|ruling (or was described |involving the |
|as a public ruling in the|interpretation of |
|Gazette in which it was |indirect tax laws, other |
|published) on the way in |than indirect tax private|
|which the Commissioner |rulings. This is much |
|considers that a relevant|broader than for the |
|provision applies or |general rulings regime |
|would apply to entities |and can extend to |
|generally or to a class |booklets, guides and fact|
|of entities. |sheets. |
|Product and class rulings|Product and class rulings|
| | |
|Product and class rulings|The Commissioner does not|
|can be provided for GST, |issue product and class |
|LCT, WET or excise. |rulings for GST, LCT, WET|
| |or excise. |
Detailed explanation of new law
10. These amendments include indirect tax rulings and excise advice in
the general rulings regime available for income tax and other
taxes, and are intended to reduce compliance costs for taxpayers by
providing generally consistent rules across different taxes. Where
necessary, limited differences have been maintained for indirect
tax and excise rules reflecting the specific characteristics of
these taxes and duties.
Inclusion in the general rulings regime
11. The extension of the general rulings regime to include indirect tax
rulings and excise advice brings indirect tax, excise duty, net
amounts, wine tax credits and their administration and the payment
or collection of a net amount or wine tax credit, all within the
scope of the general regime. As the regime applies, amongst other
things, to net amounts, it allows for rulings relating to
components that make up the net amount (for example, input tax
credits and adjustments). Excise advice extends to the
administration or collection of excise duty (for example,
provisions under the Excise Act about the administration or
collection of excise duty). [Schedule 2, items 24 to 26,
paragraphs 357-55(fb), (fc), (g), (j) and (k) of Schedule 1 to the
TAA 1953]
12. This ensures that the common rules for rulings and specific rules
for public rulings and private rulings apply to indirect taxes and
excise, subject to any specific modifications. This allows the
Commissioner to issue public rulings, including product and class
rulings and private rulings to taxpayers, that are legally binding
on the Commissioner. The adoption of the general rulings regime
for indirect tax rulings and excise advice introduces a range of
features for indirect tax and excise. Some of these features
include:
. Public rulings can cover any matter involved in the
application of a provision, including matters relating to
administration, collection and ultimate conclusions of
fact.
. Private rulings may cover anything involved in the
application of the provision, including valuations. The
Commissioner may charge for a private ruling on a
valuation issue.
. If a taxpayer has applied for a private ruling and the
Commissioner has not made the ruling or declined to make
the ruling within 60 days, and an event that extends that
time has not occurred, then the applicant can issue a
written notice requiring the Commissioner to make the
ruling. If the Commissioner does not make the ruling or
declines to rule within 30 days, then the taxpayer has an
objection right.
. The Commissioner may rely on information from other
sources, provided the Commissioner tells the applicant
what the information is, and gives them a reasonable
opportunity to respond before making the private ruling.
. The Commissioner can make assumptions about a future event
or other matter for a private ruling, provided the
Commissioner informs the applicant of the assumptions and
gives the applicant a reasonable opportunity to respond.
Right of objection
13. With the incorporation of indirect tax and excise rulings into the
general rulings regime, taxpayers that obtain an indirect tax or
excise private ruling have a right to object against that ruling
under subsection 359-60(1). This contrasts with the situation
under the current law in which to dispute the Commissioner's
interpretation of an indirect tax law, a taxpayer who obtains a
private indirect tax ruling would ordinarily need to request that
the Commissioner issue an assessment and object against that
assessment to formally test the issue.
14. Consistent with the general rulings regime, if a taxpayer objects
to a private indirect tax or excise ruling then their right of
objection against an assessment is limited to matters that they
were not able to raise as grounds for objection against the private
ruling. This ensures that there is a single avenue to object and
prevents duplicate objections from being made. [Schedule 2, item
19, section 14ZVA]
15. An amendment also ensures that objections cannot be lodged against
a private ruling if other events occur which provide an alternative
means to object to an indirect tax or excise liability. These
include:
. in the case of indirect tax, where there is an assessment
to which the ruling relates; and
. in the case of excise, where the Commissioner has made a
decision about the excise duty or other amount payable in
relation to those goods and the decision is reviewable.
[Schedule 2, item 43, paragraph 359-60(3)(c) of Schedule 1 to the
TAA 1953]
16. Where an objection has already been lodged against a private
ruling, there is a further provision in the case of excise that
also prevents duplication of dispute avenues of review where there
is an objection to a private ruling in relation to the rate of duty
or liability to duty. Section 154 of the Excise Act provides for a
right of review where there is a dispute as to the amount of duty
payable on excisable goods. If a taxpayer has already obtained a
private ruling concerning the amount of duty payable on excisable
goods, and has objected against the ruling, their ability to
commence legal action under section 154 of the Excise Act is
limited to grounds that neither were, nor could have been, grounds
for objecting against the ruling. This restriction is additional
to the amendments to section 14ZVA of the TAA 1953, as this section
only applies to decisions made under the Excise Act giving rise to
review under Part IVC of the TAA 1953. [Schedule 2, item 6,
section 155 of the Excise Act]
1. : Excise objection
A licensed manufacturer anticipates manufacturing a new type
of excisable good. They seek a private ruling as to the
amount of duty that would be payable on the good. They do
not accept the amount advised by the Commissioner in the
ruling and they lodge an objection. Subsequently, they
commence manufacture of the excisable goods. They pay the
amount of duty that the Commissioner claimed was payable in
the private ruling, and commence an action against the
Commissioner under section 154 of the Excise Act. Their
ability to commence an action under section 154 is limited
to grounds that were not, and could not have been, grounds
for objecting against the private ruling.
17. The amendments specify the time limit for lodging an objection
against a private indirect tax ruling, which is the end of the
latter of:
. 60 days after the ruling was made; or
. four years after the end of the tax period, or importation
of goods to which the ruling relates.
[Schedule 2, items 20 and 21, subsections 14ZW(1AAB) and (1A)]
18. Transitional provisions have been included so that a private
indirect tax ruling that is in force immediately before 1 July
2010, is taken as if it had been made under the new rules. This
enables objection rights to be pursued for existing private
indirect tax rulings. [Schedule 2, subitem 46(2)]
19. It was not possible to extend this to excise advice, as only
administratively binding advice (not rulings) has been able to be
provided under the existing law.
Other changes
20. A new term indirect tax or excise ruling is added to the income tax
definitions. It means a public or private ruling to the extent it
relates to an indirect tax law or an excise law (other than a fuel
tax law). The existing definitions of indirect tax rulings are
repealed. [Schedule 2, items 9 to 12, definitions of 'indirect tax
or excise ruling', 'indirect tax ruling', 'private indirect tax
ruling' and 'public indirect tax ruling' in subsection 995-1(1) of
the ITAA 1997]
21. A new term 'private indirect tax ruling' is added to the
definitions in the taxation administration provisions. To ensure
common definitions apply, three other terms are added to the
taxation administration definitions:
. 'excise law' has the meaning given by the ITAA 1997
[Schedule 2, item 13, subsection 2(1)];
. 'fuel tax law' has the meaning given by the Fuel Tax
Act 2006 [Schedule 2, item 14, subsection 2(1)]; and
. 'indirect tax law' has the meaning given by the ITAA 1997
[Schedule 2, item 15, subsection 2(1)].
22. The definition of 'private ruling' has the meaning given in section
359-5 of Schedule 1 to the TAA 1953, and the existing definition of
private ruling within the taxation administration provisions is
repealed. [Schedule 2, items 16 to 18, subsection 2(1)]
23. A definition of 'excise duty' has been included in the income tax
law to ensure that a common definition applies. The definition
adopts the meaning given by the GST law which refers to any duty of
excise imposed by a Commonwealth law. Under the general rulings
regime the advice provided by the Commissioner is limited to the
Acts and regulations of which the Commissioner has general
administration. For example, as the Commissioner has general
administration of the Excise Tariff Act 1921 the excise duty
imposed under this Act is relevant for the purposes of the
definition of 'excise duty'. [Schedule 2, item 7, definition of
'excise duty' in subsection 995-1(1) of the ITAA 1997]
24. A definition of 'excise law' has been included in the income tax
definitions, which includes the Excise Act, any other Acts that
impose excise duty, and related Acts. [Schedule 2, item 8,
definition of 'excise law' in subsection 995-1(1) of the ITAA 1997]
Existing rules: reliance on the Commissioner's interpretation
25. Section 105-60 in Schedule 1 to the TAA 1953 provides rules where a
taxpayer relies on the Commissioner's interpretation of an indirect
tax law. This section has been repealed as a result of the
inclusion of indirect tax rulings in the general ruling regime.
[Schedule 2, items 22 and 23, sections 105-1 and 105-60 of Schedule
1 to the TAA 1953]
Additions to the general rulings regime
Inconsistent rulings
26. Many indirect tax and excise rulings relate to transactions that
are long-term or recurring. As a result, the requirement in the
general rulings regime for the income year or other period, or
scheme not to have commenced, as a prerequisite to enable a ruling
to be withdrawn or revised, is not relevant in the case of indirect
tax or excise rulings.
27. There are special rules which set out the result for inconsistent
indirect tax or excise rulings that are in operation. (This
situation is distinct from where the Commissioner revises a private
ruling. The revised private ruling only applies from the date it
is issued or such later time as specified in the ruling.)
Inconsistent rulings arise in circumstances where there are two or
more conflicting rulings that apply to a taxpayer at the same time.
[Schedule 2, items 30 to 33, subsections 357-75(1), (1A), (1B) and
(2) of Schedule 1 to the TAA 1953]
28. Where an indirect tax or excise public ruling exists and a later
inconsistent indirect tax or excise private ruling is issued by the
Commissioner, the private ruling is taken to apply from the time
specified in the ruling and at that time the public ruling is taken
to cease to apply to the extent of the inconsistency. Where no
time is specified in the private ruling, it is taken to apply from
when the ruling is made, and at that time the public ruling ceases
to apply to the extent of the inconsistency. [Schedule 2, item 32,
subsection 357-75(1B) of Schedule 1 to the TAA 1953]
29. The same result occurs where an existing indirect tax or excise
private ruling and a later inconsistent indirect tax or excise
ruling is issued. The later ruling applies from the later of the
time it is made or the time specified in the ruling, and at that
time the existing ruling ceases to apply to the extent of the
inconsistency. It does not matter whether the later ruling is a
public or private ruling. [Schedule 2, item 32, subsection 357-
75(1B) of Schedule 1 to the TAA 1953]
30. These modifications to the general rulings regime reflect the
existing treatment of inconsistent rulings for indirect taxes.
31. Where an indirect tax or excise public ruling exists and a later
inconsistent indirect tax or excise public ruling is issued by the
Commissioner, taxpayers may rely on either ruling. In this case
the outcome is the same as that under the broader rulings regime.
[Schedule 2, item 32, subsection 357-75(1A) of Schedule 1 to the
TAA 1953]
1. : Inconsistent public indirect tax rulings
On 16 August 2010, the Commissioner issued a public ruling
in relation to the GST treatment of chocolate-covered fruit.
On 18 March 2011, he issued another public ruling, which
was inconsistent, in part, with the earlier ruling.
Taxpayers may rely on either ruling to the extent of the
inconsistency, until one of the rulings is withdrawn.
2. : Inconsistent public and private indirect tax rulings
The Commissioner issued a public ruling on 1 July 2010. On
15 September 2010 the Commissioner issued a private ruling
to Steve's Fishing Supplies, which specified that it would
apply from 25 October 2010. From that date, the public
ruling ceased to apply to Steve's Fishing Supplies to the
extent of the inconsistency between the two rulings.
3. : Inconsistent private indirect tax rulings
The Commissioner issued a private ruling to J & M Building
Services on 29 July 2010. On 30 December 2010 the
Commissioner issued another private ruling to J & M Building
Services. The second ruling was silent on the time from
which it began to apply. This second ruling is taken to
apply from the date it was made, which was 30 December 2010,
and from that date, the earlier ruling ceases to apply to J
& M Building Services to the extent of the inconsistency
between the two rulings.
32. In the case where an inconsistent ruling deals with an indirect tax
or excise law and another tax such as income tax, to the extent the
ruling deals with indirect tax or excise, the indirect tax and
excise rules apply. To the extent the ruling deals with another
tax, the table in section 357-75 of Schedule 1 that sets out the
rules for inconsistent rulings other than indirect tax or excise
rulings applies.
GST payable
33. A feature of the GST is that an amount of input tax credit that a
recipient can claim for a creditable acquisition is directly
dependent on the amount of the GST payable by the supplier.
34. In business to business transactions, the input tax credits that a
recipient claims should match the GST that the supplier pays if the
recipient's acquisition is wholly creditable. This is because
input tax credits reflect the amount of GST on the supply.
35. The GST treatment of a supply impacts on the input tax credits
available to a recipient and this reflects the symmetry of the GST
system. This is provided by section 11-25 of the GST Act. The tax
invoice is a mechanism for communicating between a supplier and a
recipient concerning the supplier's GST treatment of a supply.
1. : Tax invoices and GST payable
A supplier issues a tax invoice which includes an amount of
GST payable. The recipient will be able to claim an input
tax credit provided the requirements of the GST Act are met.
If the supplier issues a tax invoice that shows that no GST
is payable, then the recipient will not generally be able to
claim an input tax credit.
36. The basic rules for working out the GST payable on a supply are
contained in Subdivision 9-C of the GST Act. The basic rules may
be affected by other provisions in the GST Act and other Acts.
37. The GST Act is also supported by various machinery provisions
contained in the TAA 1953. In determining the net amount or the
amount of GST payable, all provisions affecting the taxpayer's
liability or entitlement to a refund including provisions contained
in the TAA 1953 need to be taken into consideration. [Schedule 2,
item 1, section 2-30 of the GST Act]
38. In the existing law, under subsection 105-60(2) of Schedule 1 to
the TAA 1953, a taxpayer can rely on the Commissioner's
interpretation where the Commissioner altered a previous indirect
tax ruling. The effect of this is that the underpaid amount ceases
to be payable. Once an underpaid amount ceases to be payable, this
has an impact on the amount of the input tax credit that a
recipient can claim for a creditable acquisition.
39. This provision provides protection for the entity that receives a
ruling, such that if the ruling is incorrect, they are not liable
for an amount of GST in excess of that determined in accordance
with the ruling.
40. The protection of the ruling may reduce the amount of GST payable
by a supplier that relies on a ruling. This is reflected in the
calculation of the recipient's corresponding input tax credit under
section 11-25 of the GST Act. Thus, input tax credits to which a
recipient of a supply is entitled, are dependent on the GST
liability of the supplier.
41. The amendments confirm the same outcome arises under the general
rulings regime. As a result, in cases where a ruling has been
issued, and the taxpayer relies on the ruling, the amendments
expressly confirm that the GST payable on the supply is the amount
worked out in accordance with the ruling. [Schedule 2, items 1 to
5, sections 2-30, 9-99, 11-25, 13-99 and 15-20 of the GST Act;
and items 27 and 29, subsections 357-60(1) and 357-60(3) of
Schedule 1 to the TAA 1953]
42. The provisions support the fundamental principle of GST that
recipients should only be able to claim input tax credits to the
extent that the supply to them is subject to GST.
43. These amendments include an example illustrating that in the
context of GST, relying on a ruling involves acting consistently
with the ruling in respect of the relevant transaction by issuing
tax invoices and lodging a GST return in accordance with the
ruling. Accordingly, if a supplier issues a recipient with a tax
invoice showing GST payable on a transaction, the recipient's input
tax credit entitlement (if any) cannot be affected by a ruling to
the supplier providing that the supply is GST-free. This reflects
that they have not relied on the ruling and the GST status of the
supply must be determined from the specific circumstances of the
transaction. [Schedule 2, item 28, subsection 357-60(1) of
Schedule 1 to the TAA 1953]
1. : Rulings and GST payable
Peter makes ongoing supplies of a particular food item to
Lara. Peter obtains a private ruling from the Commissioner
that the supplies are GST-free.
In making his December 2010 delivery to Lara, Peter relies
on the ruling to:
. not include any GST in the price charged to Lara;
. not issue a tax invoice to Lara;
. lodge his business activity statement (BAS) on this basis;
and
. not pay GST in relation to this supply.
As there is no GST payable because the ruling provides that
the supply is GST-free and Peter has relied on the ruling,
Lara is not able to claim an input tax credit in relation to
supplies to which the ruling applies even if the
Commissioner's ruling is incorrect.
In March 2011 Peter makes a similar supply to Lara for which
Peter would be entitled to rely on the ruling. Peter issues
a tax invoice to Lara showing GST payable on the supply.
Peter has not relied on the ruling. If the supply is in
fact a taxable supply, and Lara's acquisition is a
creditable acquisition, Lara can claim input tax credits in
respect of the supply.
44. These amendments do not result in recipients being bound by
rulings. It is the Commissioner that is bound by rulings. A
ruling only impacts on the entitlement of the recipient if it is
relied on by the supplier and affects the GST that is payable by
the supplier.
Groups, joint ventures and incapacitated entities
45. These amendments clarify what happens where an indirect tax law
makes a particular entity liable or entitled in respect of taxes or
credits that would otherwise be the liability or entitlement of
another entity. They also apply to adjustments. This occurs in
cases of GST groups, joint ventures and incapacitated entities.
46. This Schedule ensures that an indirect tax or excise ruling binds
the Commissioner in relation to both the representative entity and
the member entity where both members rely on the ruling by acting
or omitting to act in accordance with it. [Schedule 2, items 27
and 29, subsections 357-60(1) and (6) of Schedule 1 to the TAA
1953]
47. The representative entity is the representative member of a GST
group, the joint venture operator, or the representative of an
incapacitated entity. The member entity is the member of the GST
group, the participant in the GST joint venture, or the
incapacitated entity. [Schedule 2, item 29, subsection 357-60(5)
of Schedule 1 to the TAA 1953]
Fuel tax credits
48. The fuel tax credits legislation adopted the general rulings regime
when it came into operation on 1 July 2006. Accordingly, no
changes have been made to the way in which the general rulings
regime applies to the fuel tax credits legislation.
Exclusions from the general rulings regime
49. There are several areas in which modifications have been made to
the general rulings regime so that they do not apply for indirect
tax and excise rulings. These include oral rulings, end-dates for
private rulings, revised rulings and trustees.
Oral rulings
50. Under the general rulings regime, an individual taxpayer may apply
to the Commissioner for an oral ruling on how the Commissioner
considers the law applies to them. This allows taxpayers with very
simple affairs to rely on oral advice in much the same way as
written private rulings.
51. Oral rulings are not currently available for indirect tax or
excise. These taxes are business taxes and therefore the advice on
such matters is not simple non-business advice.
52. These amendments provide that taxpayers cannot apply for oral
rulings in relation to an indirect tax law (other than a fuel tax
law) or an excise law. [Schedule 2, items 44 and 45,
subsections 360-5(1) and (2A) of Schedule 1 to the TAA 1953]
End-dates for private rulings
53. Under the general rulings regime, if a private ruling does not
specify an end time, it ceases to apply at the end of the income
year or other accounting period in which it started to apply. The
reason for having a default end time for a private ruling where no
end time is specified is to provide certainty about the period
covered by the ruling.
54. Consultation on the development of these changes to include
indirect tax and excise rulings in the general rulings regime
identified end-dates as an area where there was a need for a
special rule for indirect tax rulings.
55. This Schedule amends the law so that an indirect tax or excise
private ruling that does not specify an end date continues to apply
until it is withdrawn or replaced by the Commissioner. This is
consistent with the existing law for rulings dealing with indirect
tax, allowing the Commissioner to set an end date if necessary, but
allowing flexibility to provide for unlimited application until the
ruling is replaced or withdrawn. [Schedule 2, items 35 and 36,
subsection 359-25(4) of Schedule 1 to the TAA 1953]
Revised rulings
56. Under the general rulings regime, the Commissioner cannot revise a
private ruling after the scheme to which the ruling relates, or the
income year or other accounting period has begun.
57. The term 'scheme' can capture events or circumstances beyond the
supply itself. The general rulings regime treats a scheme as
having begun to be carried out when the contract has been entered
into. However, the time when a contract is entered into is
different to the time when taxable supplies are provided under the
contract.
58. Under the existing law, the Commissioner can change an indirect tax
ruling at any time. The flexibility for the Commissioner to
withdraw or replace an indirect tax ruling ensures that competing
suppliers of goods or services are not disadvantaged in selling to
consumers when one supplier obtains a favourable ruling that is not
available to its competitors. This is a feature that is preserved
in this Schedule.
59. This Schedule excludes indirect tax and excise rulings from the
general rules in relation to the commencement of the scheme or tax
period. The result is that the Commissioner is able to revise an
indirect tax or excise ruling and the revised ruling applies to
transactions occurring after that time. The revised ruling only
applies to the extent that it is inconsistent with an earlier
ruling, and applies from the date it is issued or such later time
as specified in the private ruling. [Schedule 2, items 39 to 42,
paragraph 359-55(1)(b), subsection 359-55(1) note, subsections 359-
55(3) and (5) of Schedule 1 to the TAA 1953]
60. The ability of the Commissioner to specify a later date from which
a revised ruling will apply, provides flexibility so that in
appropriate cases the Commissioner can provide a reasonable period
for taxpayers to take into account the new ruling.
61. Under the general rulings regime, a public ruling applies from when
it is published or from a specified earlier or later time. However,
such a ruling does not apply to a scheme that has commenced if the
ruling is less favourable than a general administrative practice
that applies to a scheme. A public ruling that is withdrawn
continues to apply to schemes that had begun to be carried out
before the withdrawal. This Schedule modifies these rules in
relation to indirect tax and excise rulings as set out above.
[Schedule 2, item 34, subsections 358-10(2) and 358-20(3) of
Schedule 1 to the TAA 1953]
Trustees
62. Under the general rules, only the entity that receives a private
ruling can rely on it.
63. A special rule ensures a private ruling given to or for the
trustee of a trust and relating to the affairs of the trust also
applies to another trustee appointed to replace the trustee, or to
the beneficiaries of the trust.
64. This rule is important in the income tax context because
beneficiaries may be subject to tax on the income of the trust
under section 97 of the Income Tax Assessment Act 1936. It is
therefore appropriate that they receive the protection of income
tax and related private rulings given to the trustee.
65. In the indirect tax context, the beneficiary could be the recipient
of a supply from the trustee. Where the beneficiary is dealing
with the trustee of a trust, a rule which makes a private ruling
given to the trustee apply to the beneficiary may have an
unintended effect. Therefore it is not appropriate for this
special rule to be extended to cover indirect tax.
66. Similarly the excise legislation imposes an excise liability on the
entity that manufactures or deals with the goods. Accordingly, if
a trustee undertakes such activities, excise obligations are not
generally imposed on beneficiaries of the trust.
67. As the special rule is not appropriate in the indirect tax and
excise context, a carve-out to the special rule has been included
in the amendments. As a result, an indirect tax or excise private
ruling given to a trustee does not apply to a beneficiary of the
trust. [Schedule 2, items 37 and 38, paragraphs 359-30(a) and (b)
of Schedule 1 to the TAA 1953]
68. However, the general rulings system does apply to trusts in other
respects. As a result, a private ruling given to a trustee applies
to a trustee replacing an earlier trustee.
Application and transitional provisions
Application provisions
69. The amendments made by this Schedule apply to rulings made on or
after 1 July 2010. These amendments also apply in some
circumstances to rulings requested before 1 July 2010. This is
dealt with in the transitional provisions.
Transitional rules
70. This Schedule applies the general rulings system to indirect tax
private rulings that are in operation immediately before
1 July 2010. This ensures that the adoption of the general rulings
regime does not force taxpayers to seek revised private rulings or
for the Commissioner to need to reissue existing rulings with
resulting compliance cost impacts for taxpayers. [Schedule 2,
subitem 46(2)]
71. Currently, what is regarded as a public indirect tax ruling is very
broad and covers all advice given or published by the Commissioner
on an indirect tax law. In its review, the Board of Taxation found
that this means there is no scope for the Commissioner to publish
simplified general advice without it being classified as a public
ruling and this undermines the provision of simple advice and
increases the complexity of advice given. The Board noted that a
consequence of adopting the income tax ruling system for indirect
tax would be that the range of documents that are considered public
rulings would be reduced. It found that this would enable the
Commissioner to publish simplified, more readily accessible advice
that meets the needs of different classes of taxpayers.
72. These amendments ensure that only those rulings that are labelled
as a public ruling (or were described in the Gazette in which they
were published as a public ruling) that are in operation
immediately before 1 July 2010 are public rulings under the new
rules. This is consistent with the broader rulings regime.
[Schedule 2, subitem 46(3)]
73. As existing private and public indirect tax rulings are treated as
if made under the revised ruling regime, all of the content within
those rulings is preserved, and has ruling status. This includes
the explanation and example sections of existing public indirect
tax rulings.
74. The general rulings regime also applies to an application for a
private GST, LCT or WET ruling that was with the Commissioner
immediately before 1 July 2010 where the ruling had not been made
or the application declined by the Commissioner or the application
withdrawn by the taxpayer. [Schedule 2, subitem 46(4)]
Chapter 3
Tax invoices
Outline of chapter
75. Schedule 3 to this Bill amends the goods and services tax (GST) law
to simplify the requirements for a document to be a tax invoice by
expressing the requirements in a more principled way.
Context of amendments
Tax invoices
76. Tax invoices play an important role in the GST system. They are
the mechanism by which the GST treatment that a supplier adopts for
a supply is communicated by the supplier to a recipient and
reconciled with the recipient's treatment of an acquisition.
77. To ensure this communication occurs, recipients must hold a tax
invoice to substantiate input tax credit claims for acquisitions
over $75 (excluding GST). Similarly, suppliers must provide a tax
invoice within 28 days of being requested to do so by the
recipient.
78. Section 29-70 of the A New Tax System (Goods and Services Tax) Act
1999 (GST Act) and Regulations 29-70.01 and 29-70.02 of the A New
Tax System (Goods and Services Tax) Regulations 1999 (GST
Regulations) set out the requirements that a document must satisfy
in order for it to be a tax invoice.
79. The current list of requirements is lengthy and prescriptive. Even
if all of the necessary information has been included on a
document, errors in the form in which this information is provided
or in the structure of the document can mean that the document is
not a tax invoice.
Summary of new law
80. Schedule 3 amends the present requirements for an invoice to be a
tax invoice, replacing the current prescriptive list with
equivalent but more flexible principles. It also integrates and
streamlines the special requirements for tax invoices that are
recipient created tax invoices.
81. As a result of these amendments, a document may be a tax invoice if
it is issued by the supplier in the approved form and contains
sufficient information to allow a number of key matters to be
determined, including:
. the supplier's identity and Australian Business Number
(ABN);
. the nature of the supply; and
. the amount of GST payable.
82. These amendments can also allow an entity to treat a document as a
tax invoice. Where an entity receives a document from another
entity that is not a tax invoice as it is missing key information,
then the entity may treat the document as a tax invoice if:
. the document makes clear that it is intended as a tax
invoice; and
. the missing information can be obtained from other
documents issued by the other entity.
83. This concession can also apply to recipient created tax invoices.
84. As a result of these changes minor errors should no longer result
in documents not being tax invoices. Instead documents generally
only fail to constitute a tax invoice where key information has not
been provided.
Comparison of key features of new law and current law
|New law |Current law |
|Issuer of tax invoices |Issuer of tax invoices |
|Tax invoices must be |Tax invoices must be |
|issued by the supplier |issued by the supplier |
|(or by the recipient if |(or by the recipient if |
|they are recipient |they are recipient |
|created tax invoices). |created tax invoices). |
|Information required |Information required |
|A tax invoice must |A tax invoice must |
|contain information |contain: |
|sufficient to determine: |the issuer's ABN; |
|the supplier's identity |the price of the supply; |
|and ABN; |the words 'tax invoice' |
|if the consideration for |stated prominently; |
|the supply is $1,000 or |the date of issue; |
|more or the document is |the name of the supplier;|
|issued by the recipient, |and |
|the recipient's identity |a brief description of |
|or ABN; |the thing supplied. |
|what is supplied, |If the consideration for |
|including the quantity |the supply is $1,000 or |
|and price of what is |more, then it must also |
|supplied; |include: |
|the extent to which |the name of the |
|supplies are taxable; |recipient; |
|the date of issue; and |the ABN or address of the|
|the amount of GST payable|recipient; and |
|and, if the document is a|the quantity of goods or |
|recipient created tax |extent of services |
|invoice, that the GST is |supplied. |
|payable by the supplier. |Additional requirements |
|It must also be clear |also apply based on the |
|from the document that it|GST treatment of the |
|is intended to be a tax |supplies covered by the |
|invoice and, if the |tax invoice. |
|document is issued by the|If all of the supplies |
|recipient, a recipient |are taxable and GST |
|created tax invoice. |payable is 1/11th of the |
| |total price, then the tax|
| |invoice must include a |
| |statement to the effect |
| |that the total amount |
| |payable includes GST or |
| |the total amount of GST |
| |payable. |
| |If all of the supplies |
| |are taxable but GST |
| |payable is less than |
| |1/11th of the total |
| |price, the tax invoice |
| |must show the amount, |
| |excluding GST, payable |
| |for the taxable supply or|
| |supplies and the amount |
| |of GST payable on the |
| |taxable supply or |
| |supplies. |
| |If not all supplies are |
| |taxable, then the tax |
| |invoice must clearly |
| |identify each taxable |
| |supply, state the total |
| |amount of GST payable and|
| |the total amount payable.|
|New law |Current law |
|Treating documents as tax|Treating documents as tax|
|invoices |invoices |
|An entity that is issued |Taxpayers may only treat |
|with a document may treat|a document that does not |
|the document as a tax |contain the specific |
|invoice if: |information required as a|
|the document has been |tax invoice if the |
|issued by the supplier |Commissioner of Taxation |
|(or the recipient in the |(Commissioner) has |
|case of recipient created|exercised his discretion |
|tax invoices); |to treat the document as |
|it is clearly able to be |a tax invoice. |
|determined from the | |
|document that it is | |
|intended to be a tax | |
|invoice (or a recipient | |
|created tax invoice if | |
|issued by the recipient) | |
|but it is missing certain| |
|required information; and| |
| | |
|the information can be | |
|clearly ascertained from | |
|one or more other | |
|documents provided by the| |
|supplier (or the | |
|recipient in the case of | |
|recipient created tax | |
|invoices). | |
|Taxpayers may also treat | |
|a document that does not | |
|contain the specific | |
|information required as a| |
|tax invoice if the | |
|Commissioner has | |
|exercised his discretion | |
|to treat the document as | |
|a tax invoice. | |
|GST groups |GST groups |
|A document may be a tax |There are no special |
|invoice, despite not |rules about the contents |
|identifying the |of a tax invoice for |
|recipient, if it |members of GST groups. |
|identifies the GST group,| |
|the representative member| |
|or another member of the | |
|GST group to which the | |
|recipient belongs. | |
|A recipient of a supply | |
|can still require a | |
|supplier to provide a tax| |
|invoice which identifies | |
|the recipient of the | |
|supply rather than just | |
|the relevant GST group, | |
|or another member or the | |
|representative member of | |
|the GST group. | |
|Recipient created tax |Recipient created tax |
|invoices |invoices |
|Recipient created tax |Recipient created tax |
|invoices are tax invoices|invoices are tax invoices|
|issued by the recipient |issued by the recipient |
|of a taxable supply. |of a taxable supply. |
|This is only permitted |This is only permitted |
|where the tax invoice |where the tax invoice |
|belongs to a class of tax|belongs to a class of tax|
|invoices that the |invoices that the |
|Commissioner has |Commissioner has |
|determined in writing may|determined in writing may|
|be issued by the |be issued by the |
|recipient. |recipient. |
|Recipient created tax |Separate, though |
|invoices are subject to |overlapping, requirements|
|the same requirements as |exist for a document to |
|other tax invoices. |be a recipient created |
|However, as outlined |tax invoice. |
|above, recipient created | |
|tax invoices must also | |
|make clear that they are | |
|recipient created tax | |
|invoices. The following | |
|information must also be | |
|able to be clearly | |
|ascertained from the | |
|document: | |
|the recipient's identity | |
|or ABN; and | |
|that the supplier is | |
|liable for any GST | |
|payable. | |
Detailed explanation of new law
Tax invoices
General requirements
85. These amendments repeal and replace the present requirements for a
document to be a tax invoice in subsection 29-70(1) of the GST Act.
The regulations containing the prior list of requirements will no
longer have effect and are expected to be repealed by regulation.
86. Following these amendments, a document is a tax invoice if it meets
several requirements.
87. The first of these is that the document is issued by the supplier,
unless it is a recipient created tax invoice, in which case it must
be issued by the recipient. [Schedule 3, item 1, paragraph 29-
70(1)(a)]
88. The second requirement is that the document is in the approved
form. Consistent with the present rules, this permits the
Commissioner to set basic procedural requirements to ensure
efficient administration. [Schedule 3, item 1, paragraph 29-
70(1)(b)]
89. The third requirement is that the document contains enough
information to allow the determination of:
. the supplier's identity and ABN;
. the identity or ABN of the recipient, if the consideration
for the supply is $1,000 or more;
. what is being supplied, including the quantity (if
applicable) and the price;
. the GST treatment of the supply (that is, to what extent
it is taxable);
. the date the document is issued;
. the amount of GST (if any) payable in relation to each
supply included on the document; and
. that it can be clearly determined from the document that
it is intended to be a tax invoice.
[Schedule 3, item 1, paragraphs 29-70(1)(c) and (d)]
90. Further matters may be specified by regulation. [Schedule 3,
item 1, subparagraph 29-70(1)(c)(viii)]
91. The extended requirements for recipient created tax invoices are
discussed separately in paragraph 3.28.
92. As is currently the case, a tax invoice may include more than one
supply, provided it meets the information requirements for each
supply. If the document does not meet the requirements to be a tax
invoice for a particular supply or supplies, it remains a tax
invoice for other supplies it covers for which it meets the
requirements.
93. Consistent with the flexible approach underlying these changes, the
amendments require key information to be able to be clearly
ascertained from the document. This means that, provided the
information can be found in the document, it does not matter that
it is not specifically stated or in a particular format. For
example, the requirement to provide the price of what is supplied
could be satisfied by stating a unit price and the quantity, or
stating the extent to which a taxable supply is taxable and the
amount of GST payable. Similarly, one piece of information may
often be sufficient to satisfy more than one condition. For
example, the description of the supply may also make clear the
identity of the supplier, such as in certain cases where a new
membership in a club is issued.
94. However, it is not enough that the required information can be
found in the document. The required information must be clear in
the document. Information is also not able to be clearly
ascertained from a document if the information can only be
determined by reference to some outside source. For example, if a
document met all of the requirements to be a tax invoice, but did
not contain the supplier's ABN, it would not be sufficient if it
contained information which would allow the ABN to be found on the
Australian Business Register. Information that can be determined
in conjunction with an external reference is not information that
can be clearly ascertained from the document.
95. The requirement that the document contains sufficient information
to make clear that it is a tax invoice establishes an objective
test that must be satisfied from the document alone. Other
information and documents relating to the intentions of the issuer
are not relevant. This objective test provides certainty by
ensuring that the status of the document does not depend on
subjective intention or external information that may not be
available to the recipient.
96. The most direct way to satisfy this requirement is to include the
words 'tax invoice' on the document. However, other forms of words
are also acceptable (for example, 'GST invoice'). In some
circumstances, the context of the document itself may make this
intention clear without any title to this effect. For example, a
document could include a statement to the effect that it provides
all the information needed for the recipient to claim their input
tax credits. However, merely containing all of the other required
information will not be sufficient to demonstrate that the document
is intended to be a tax invoice. It is expected that to avoid any
doubt, most suppliers will continue to include the words 'tax
invoice' on documents. [Schedule 3, item 1, paragraph 29-70(1)(d)]
97. The Commissioner retains the discretion to treat a document that
does not satisfy the tax invoice requirements as a valid tax
invoice. [Schedule 3, item 1, subsection 29-70(1B)]
98. Despite the changes made to tax invoices, in all cases documents
that satisfy the current requirements remain tax invoices.
Suppliers that comply with the existing law will not be required to
make any changes to existing systems as a result of these
amendments. Existing businesses have established systems in place
to generate tax invoices and recipient created tax invoices and
requiring change when it is not needed would impose unnecessary
compliance costs.
99. Instead, these amendments seek to remove the excessive compliance
costs that can be imposed on recipients which result from the
infrequent cases where non-compliant tax invoices are issued to
them by suppliers.
100. Tax invoices complying with existing Australian Taxation Office
(ATO) guidelines will continue to be valid tax invoices and the
ATO's voluntary industry code for tax invoices continues to set out
best practice.
101. These revised requirements do not apply to adjustment notes. Most
of the requirements for adjustment notes are set by a legislative
determination by the Commissioner.
Recipient created tax invoices
102. Presently separate, though overlapping, requirements exist for
recipient created tax invoices. These amendments remove this
distinction, creating a single set of criteria. However, a number
of the requirements apply specifically to recipient created tax
invoices. Recipient created tax invoices must include the identity
or ABN of the recipient, even where the total value of the supplies
included in the document is less than $1,000. It is also a
requirement that the document clearly indicates that the GST is
payable by the supplier. Finally, it must be clear from the
document that it is intended to be a recipient created tax invoice.
[Schedule 3, item 1, subparagraphs 29-70(1)(c)(ii) and (vii),
paragraph 29-70(1)(d)]
103. These extra requirements reflect the special features of recipient
created tax invoices. As these documents are issued by the
recipient it is important that the recipient is identified by the
document. Similarly, as the receipt of a recipient created tax
invoice has quite different implications for the supplier than the
receipt of a tax invoice, it is important that the nature of the
document be made clear. Accordingly, it must be made clear in the
document that it is intended to be a recipient created tax invoice
and that the GST is payable by the entity in receipt of the
document.
104. These amendments continue to allow the Commissioner to specify
classes of tax invoices that are permitted to be issued by
recipients. As a result, all existing legislative instruments
specifying such classes remain valid.
Use of other documents by recipients
105. Where a recipient receives a document that is intended to be a tax
invoice, but it does not contain all of the required information,
the document may be treated as a tax invoice by the recipient if
the missing information is able to be ascertained from one or more
other documents issued by the supplier. [Schedule 3, item 1,
subsection 29-70(1A)]
106. Such other documents could range from other documentation provided
in relation to a transaction, prior tax invoices or a business card
containing the supplier's ABN that has been provided by the
supplier to the recipient.
107. These other documents need not have been intended as a tax invoice.
Instead, they merely need to have been issued by the supplier and
contain the required information.
108. These amendments address concerns expressed that the tax invoice
requirements often result in a recipient being disadvantaged by
their supplier's error. This concern is addressed by allowing
recipients to claim input tax credits if the recipient has a
document intended to be a tax invoice and the missing information
can be clearly ascertained from other documents provided by the
supplier.
109. Although the document is treated as a tax invoice for the purposes
of the recipient it does not satisfy the obligation of the supplier
to provide a tax invoice. Thus a recipient may still request the
supplier to supply a tax invoice that meets the tax invoice
requirements. Consistent with the present situation, the supplier
must then provide a valid tax invoice within 28 days of this
request.
110. This outcome ensures that the more flexible tax invoice rules that
the amendments introduce do not inadvertently result in suppliers
becoming less diligent in providing the necessary tax invoice
information in one document. Were this to occur on a wide scale
then it would result in higher compliance costs being passed onto
recipients that would need to devote more resources to identifying
multiple documents to obtain the necessary tax invoice information.
111. Recipients are under no obligation to use this concession. Rather,
it is one of a number of options that are available to a recipient.
If a recipient receives a non-compliant tax invoice, they may
instead request a valid tax invoice from the supplier.
Alternatively, they may seek to have the Commissioner exercise one
of his various relevant discretions or powers, such as treating a
document that is not a tax invoice as a tax invoice or allowing an
input tax credit to be attributed without a tax invoice. [Schedule
3, item 1, subsection 29-70(1B) and the note following
subsection 29-70(1B)]
112. The same rule also applies for suppliers in the case of recipient
created tax invoices.
113. However, this concession does not apply to recipients for recipient
created tax invoices they issue. In this case, as the recipient
was responsible for producing the document, it is appropriate that
the recipient bear responsibility for issuing a document meeting
the necessary requirements. [Schedule 3, item 1, subsection 29-
70(1A)]
Tax invoices issued by agents
114. The GST law also allows agents to issue tax invoices for a supply
made through the agent. Tax invoices issued by agents will be
covered by the amendments in the same way as all other tax
invoices.
115. In particular, where an agent issues a tax invoice for a supply
made by another entity through the agent, the recipient of this
supply may treat the document as a tax invoice in the same way they
could if the document was issued by the supplier. Likewise, when
the agent rather than the recipient receives a flawed tax invoice
for an acquisition made by the recipient through the agent, this
concession can similarly apply to allow the recipient to treat the
document as a tax invoice using information in other documents
provided to the agent.
Tax invoices issued to entities in GST groups
116. These amendments also address issues concerning input tax credits
that arise in the context of GST groups.
117. Under normal circumstances the GST grouping rules mean that all
input tax credits are claimed by the representative member on
behalf of the GST group. As a result there is generally little
significance attached to which particular entity within the GST
group made the relevant acquisition.[1] However, the correct
entity must be identified on the tax invoice. Often this can
create difficulties for GST groups and their suppliers, as
suppliers may be uncertain which of the grouped entities is making
the acquisition.
118. These amendments address this situation by modifying the
information required for a document to be a tax invoice for
acquisitions by a member of a GST group.
119. If a document:
. would be a tax invoice if it contained information from
which the recipient's identity or ABN could be readily
determined; and
. contains sufficient information to clearly show the
identity of the GST group, the representative member or
another member of the GST group,
then the document is a tax invoice. [Schedule 3, item 3,
subsections 48-57(1) and (3)]
120. This concession, however, only applies if the representative member
of the GST group is entitled to claim an input tax credit for the
acquisition. This ensures that the concession only applies to
acquisitions by members of the GST group. [Schedule 3, item 3,
paragraph 48-57(1)(c)]
121. If another entity is identified in the document rather than the
acquiring entity, the concession only applies if the representative
member would have been entitled to claim the input tax credit had
that other entity made the acquisition. Again, this ensures the
concession only applies if the entity identified is a member of the
GST group. [Schedule 3, item 3, subparagraph 48-57(1)(d)(iii)]
122. This concession reducing the identification requirements in GST
groups can apply in conjunction with the concession allowing
recipients to treat a document as a tax invoice despite it missing
information where other supplier-issued documents enables the
minimum tax invoice information requirements to be met. For
example, a document can be treated as a tax invoice by a recipient
of a supply if:
. despite not identifying the recipient of the supply, it
identifies the representative member of the group; and
. it omits the ABN of the supplier but the ABN is included
on another document issued by the supplier to the
recipient.
123. Although a document can be treated as a tax invoice as a result of
the grouping concession, it does not satisfy the requirement for
suppliers to issue a tax invoice identifying the recipient of the
supply or supplies at the request of the recipient. While
generally the identity of the particular entity making the
acquisition is not significant in the context of a GST group there
are circumstances in which it is important, such as where
adjustments arise following an entity leaving the GST group. This
qualification ensures that taxpayers still have a legal right to a
more accurate tax invoice should it become necessary, but are not
obliged to seek such a tax invoice where it is otherwise
unnecessary. [Schedule 3, item 3, subsection 48-57(2)]
124. The tax invoice concession for GST groups does not apply to
recipient created tax invoices. Therefore recipients issuing
recipient created tax invoices must include their identity on the
document, rather than just identifying the GST group or another
member of the GST group. Applying a concession in these
circumstances is unnecessary as there are no compliance costs
associated with self-identification.
Miscellaneous matters
125. The regulations include rules in relation to how amounts are to be
rounded on tax invoices. Following these amendments, rounding on
tax invoices will be addressed under section 9-90 of the GST Act.
126. The definition of a 'tax invoice' in the GST Act is amended to
reflect the additional rules included for tax invoices and to
clarify the interaction between the tax invoice rules and the GST
branch rules. This latter change confirms that the GST branch
registration number must be included on tax invoices where taxable
supplies are made through a GST branch. [Schedule 3, item 4,
definition of' 'tax invoice' in section 195-1]
127. The table of special rules concerning tax invoices and adjustment
notes is updated. [Schedule 3, item 2, section 29-99]
Application and transitional provisions
128. These amendments apply in relation to net amounts for tax periods
commencing on or after 1 July 2010. [Schedule 3, item 5]
Index
Schedule 1: GST groups and GST joint ventures
|Bill reference |Paragraph |
| |number |
|Item 1, section 48-1 and item 2 |1.87 |
|Item 3, subsections 48-5(1) to (3) |1.18 |
|Item 3, subsection 48-5(4) and item 16, |1.19 |
|subsections 48-71(1) and (3) | |
|Item 3, subsections 48-7(1) and (2) |1.20 |
|Item 3, subsections 48-7(3) and (4) |1.21 |
|Item 4, subsection 48-10(2A) |1.35 |
|Item 5 |1.87 |
|Item 6, subsection 48-40(1), item 7, |1.26 |
|paragraph 48-40(1)(b), item 8, | |
|subsection 48-40(1), item 9, | |
|subsection 48-45(1), item 10, | |
|paragraph 48-45(1)(b), item 11, | |
|subsection 48-45(2), item 12, | |
|subsection 48-50(1) and item 13, | |
|paragraph 48-50(1)(a) | |
|Item 14, section 48-51 |1.27 |
|Item 14, section 48-52 |1.28 |
|Item 14, section 48-53 |1.29 |
|Item 15 |1.87 |
|Item 16, subsections 48-70(1) and (3) |1.22 |
|Item 16, paragraphs 48-70(1)(e) and (2)(c), |1.33 |
|and subsections 48-70(4) and (5) | |
|Item 16, subsections 48-71(2) and (3) |1.31 |
|Item 16, subsection 48-70(4) and subsections|1.24 |
|48-71(1) and (3) | |
|Item 16, subsections 48-70(6) and (7) |1.23 |
|Item 17 |1.87 |
|Item 18 |1.87 |
|Item 19, subsections 48-73(1A) and (1B) |1.32 |
|Item 20 |1.25 |
|Item 20, section 48-75 |1.34 |
|Item 21, section 51-1 and item 22 |1.87 |
|Item 23, item 24, subsection 51-5(1), |1.36 |
|item 25, item 26, paragraph 51-5(1)(e), | |
|item 27, subsection 51-5(1), and item 28, | |
|subsections 51-5(2) and (3) | |
|Item 28, subsection 51-5(4) and item 31, |1.37 |
|subsections 51-75(1) and (3) | |
|Item 29, subsections 51-7(1) and (2) |1.38 |
|Item 29, subsections 51-7(3) and (4) |1.39 |
|Item 30 |1.87 |
|Item 31, subsections 51-70(1) and (2) |1.40 |
|Item 31, subsection 51-70(3), and |1.42 |
|subsections 51-75(1) and (3) | |
|Item 31 |1.43 |
|Item 31, subsections 51-70(4) and (5) |1.41 |
|Item 31, subsections 51-75(2) and (3) |1.44 |
|Item 32 |1.87 |
|Item 33, paragraph 151-25(1)(c), item 34, |1.87 |
|paragraph 151-25(1)(d) and item 35 | |
|Items 36 to 40 |1.87 |
|Items 41 and 42 |1.87 |
|Items 45 and 63 |1.69 |
|Items 46 to 49 |1.89 |
|Items 50 and 51 |1.88 |
|Items 52 and 53 |1.90 |
|Items 54 and 55, sections 110-60 and 110-65 |1.46 |
|Items 56 and 57, subsection 444-80(1) and |1.49 |
|item 58, paragraphs 444-80(1A)(a) to (c) | |
|Item 58, paragraph 444-80(1A)(d) and |1.52 |
|subsection 444-80(1B) | |
|Item 58, paragraph 444-80(1A)(e) |1.53 |
|Item 58, subsection 444-80(1C) |1.55 |
|Item 58, subsection 444-80(1D) |1.56 |
|Item 58, subsection 444-80(1E) |1.57 |
|Items 59 and 60, subsection 444-90(1) and |1.60 |
|item 61, paragraphs 444-90(1A)(a) to (c) | |
|Item 61, paragraph 444-90(1A)(d) and |1.63 |
|subsection 444-90(1B) | |
|Item 61, paragraph 444-90(1A)(e) |1.64 |
|Item 61, subsection 444-90(1C) |1.66 |
|Item 61, subsection 444-90(1D) |1.67 |
|Item 61, subsection 444-90(1E) |1.68 |
|Item 62 |1.91 |
|Subitem 43(1) |1.71 |
|Subitem 43(2) |1.72 |
|Subitem 43(3) |1.73 |
|Subitem 43(4) |1.74 |
|Subitem 43(5) |1.75 |
|Subitem 43(6) |1.76 |
|Subitem 43(7) |1.77 |
|Subitem 43(8) |1.78 |
|Subitem 44(1) |1.79 |
|Subitem 44(2) |1.80 |
|Subitem 44(3) |1.81 |
|Subitem 44(4) |1.82 |
|Subitem 44(5) |1.83 |
|Subitem 44(6) |1.84 |
|Subitem 44(7) |1.85 |
|Subitem 44(8) |1.86 |
Schedule 2: Rulings
|Bill reference |Paragraph |
| |number |
|Item 1, section 2-30 of the GST Act |2.37 |
|Items 1 to 5, sections 2-30, 9-99, 11-25, |2.41 |
|13-99 and 15-20 of the GST Act; and items 27| |
|and 29, subsections 357-60(1) and 357-60(3) | |
|of Schedule 1 to the TAA 1953 | |
|Item 6, section 155 of the Excise Act |2.16 |
|Item 7, definition of 'excise duty' in |2.23 |
|subsection 995-1(1) of the ITAA 1997 | |
|Item 8, definition of 'excise law' in |2.24 |
|subsection 995-1(1) of the ITAA 1997 | |
|Items 9 to 12, definitions of 'indirect tax |2.20 |
|or excise ruling', 'indirect tax ruling', | |
|'private indirect tax ruling' and 'public | |
|indirect tax ruling' in subsection 995-1(1) | |
|of the ITAA 1997 | |
|Item 13, subsection 2(1) |2.21 |
|Item 14, subsection 2(1) |2.21 |
|Item 15, subsection 2(1) |2.21 |
|Items 16 to 18, subsection 2(1) |2.22 |
|Item 19, section 14ZVA |2.14 |
|Items 20 and 21, subsections 14ZW(1AAB) and |2.17 |
|(1A) | |
|Items 22 and 23, sections 105-1 and 105-60 |2.25 |
|of Schedule 1 to the TAA 1953 | |
|Items 24 to 26, paragraphs 357-55(fb), (fc),|2.11 |
|(g), (j) and (k) of Schedule 1 to the TAA | |
|1953 | |
|Items 27 and 29, subsections 357-60(1) and |2.46 |
|(6) of Schedule 1 to the TAA 1953 | |
|Item 28, subsection 357-60(1) of Schedule 1 |2.43 |
|to the TAA 1953 | |
|Item 29, subsection 357-60(5) of Schedule 1 |2.47 |
|to the TAA 1953 | |
|Items 30 to 33, subsections 357-75(1), (1A),|2.27 |
|(1B) and (2) of Schedule 1 to the TAA 1953 | |
|Item 32, subsection 357-75(1A) of Schedule 1|2.31 |
|to the TAA 1953 | |
|Item 32, subsection 357-75(1B) of Schedule 1|2.28, 2.29 |
|to the TAA 1953 | |
|Item 34, subsections 358-10(2) and 358-20(3)|2.61 |
|of Schedule 1 to the TAA 1953 | |
|Items 35 and 36, subsection 359-25(4) of |2.55 |
|Schedule 1 to the TAA 1953 | |
|Items 37 and 38, paragraphs 359-30(a) and |2.67 |
|(b) of Schedule 1 to the TAA 1953 | |
|Items 39 to 42, paragraph 359-55(1)(b), |2.59 |
|subsection 359-55(1) note, subsections | |
|359-55(3) and (5) of Schedule 1 to the TAA | |
|1953 | |
|Item 43, paragraph 359-60(3)(c) of Schedule |2.15 |
|1 to the TAA 1953 | |
|Items 44 and 45, subsections 360-5(1) and |2.52 |
|(2A) of Schedule 1 to the TAA 1953 | |
|Subitem 46(2) |2.18, 2.70 |
|Subitem 46(3) |2.72 |
|Subitem 46(4) |2.74 |
Schedule 3: Tax invoices
|Bill reference |Paragraph |
| |number |
|Item 1, paragraph 29-70(1)(a) |3.13 |
|Item 1, subsection 29-70(1A) |3.31, 3.39 |
|Item 1, paragraph 29-70(1)(b) |3.14 |
|Item 1, subsection 29-70(1B) |3.23 |
|Item 1, subsection 29-70(1B) and subsequent |3.37 |
|note | |
|Item 1, paragraphs 29-70(1)(c) and (d) |3.15 |
|Item 1, subparagraphs 29-70(1)(c)(ii) and |3.28 |
|(vii), paragraph 29-70(1)(d) | |
|Item 1, subparagraph 29-70(1)(c)(viii) |3.16 |
|Item 1, paragraph 29-70(1)(d) |3.22 |
|Item 2, section 29-99 |3.53 |
|Item 3, subsections 48-57(1) and (3) |3.45 |
|Item 3, paragraph 48-57(1)(c) |3.46 |
|Item 3, subparagraph 48-57(1)(d)(iii) |3.47 |
|Item 3, subsection 48-57(2) |3.49 |
|Item 4, definition of' 'tax invoice' in |3.52 |
|section 195-1 | |
|Item 6 |3.54 |
-----------------------
[1] It should be noted, however, that it is still necessary for a
particular entity to be able to demonstrate it has made the relevant
acquisition in order for a creditable acquisition to arise. This
requirement is not modified by the grouping provisions in section 48-45
as these only modify the entity that is entitled to the credit and how
creditable purpose is determined. If no entity within a group at the
appropriate time can demonstrate they are, or were, entitled to a credit
then it cannot be claimed.