Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
TREASURY LAWS AMENDMENT (BLACK ECONOMY TASKFORCE
MEASURES NO. 1) BILL 2018
Amendments to be moved on behalf of the Government
SUPPLEMENTARY EXPLANATORY MEMORANDUM
(Circulated by authority of the
Minister for Revenue and Financial Services, Minister for Women and Minister
Assisting the Prime Minister for the Public Service the Hon Kelly O'Dwyer MP)
Table of contents
Glossary................................................................................................. 1
General outline and financial impact ...................................................... 3
Chapter 1 Third party reporting .................................................... 5
Chapter 2 Statement of Compatibility with Human Rights ............ 9
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
Bill Treasury Laws Amendment (Black Economy
Taskforce Measures No. 1) Bill 2018
Commissioner Commissioner of Taxation
GST Act A New Tax System (Goods and Services Tax)
Act 1999
1
General outline and financial impact
Third party reporting
The amendments to Schedule 2 to the Bill treat the Commissioner as
having exempted entities from the requirement to report payments to other
entities (such as contractors) for courier or cleaning services where the
total amount of payments an entity receives for courier or cleaning
services are less than 10 per cent of the entity's GST turnover.
Date of effect: Consistent with Schedule 2 to the Bill, the amendments
apply to transactions that occur on or after 1 July 2018.
Proposal announced: The amendments have not previously been
announced.
Financial impact: The expansion of the reporting requirements for
courier and cleaning services is estimated to have a gain to revenue of
$132 million from 2017-18 to 2020-21. This includes an estimated
increase in goods and services tax receipts of $56 million from 2017-18 to
2020-21. Schedule 2 implements this measure.
Human rights implications: The amendments do not raise any human
rights issues. See Statement of Compatibility with Human Rights --
Chapter 2, paragraphs 2.1 to 2.4.
Compliance cost impact: The amendments have no additional
compliance cost impact.
3
Chapter 1
Third party reporting
Outline of chapter
1.1 The amendments to Schedule 2 to the Bill treat the
Commissioner as having exempted entities from the requirement to report
payments to other entities (such as contractors) for courier or cleaning
services where the total amount of payments an entity receives for courier
or cleaning services are less than 10 per cent of the entity's GST turnover.
Detailed explanation of new law
1.2 The Commissioner is taken to have made a determination under
subsection 396-70(4) of Schedule 1 to the Taxation Administration
Act 1953. This applies from the date of commencement of Schedule 2 to
the Bill. [Amendment 1, item 3(1)]
1.3 The determination that is taken to be made exempts entities that
make a supply of either a courier or cleaning service from the requirement
to prepare and give a report to the Commissioner detailing payments made
to other entities for courier or cleaning services. The exemption applies if:
• the total payments a reporting entity receives for supplies of
courier or cleaning services are less than 10 per cent of the
reporting entity's relevant GST turnover (the
turnover-threshold test);
• the reporting entity is not required to report details of the
transaction under a separate reporting obligation in
section 396-55 of Schedule 1 to the Taxation Administration
Act 1953; and
• the entity has not chosen to prepare and give the report.
[Amendment 1, items 3(2) and 3(3)]
1.4 The determination that is taken to be made ensures that entities
that only make a minimal number of supplies of cleaning or courier
services as a proportion of their overall GST turnover are not required to
prepare and give reports. [Amendment 1, items 3(2) and 3(3)]
Turnover-threshold test
1.5 The turnover-threshold test applies to each report that the entity
is required to prepare and give to the Commissioner. The test also applies
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Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018
separately to courier and cleaning services, so that if an entity offers both
courier and cleaning services it must work out whether it satisfies the test
separately for both cleaning and courier services. If an entity receives less
than 10 per cent of its GST turnover in payments for courier services, but
10 per cent or more of its GST turnover in payments for cleaning services,
it will be required to report payments made to contractors or
subcontractors in relation to cleaning services and not courier services.
[Amendment 1, items 3(2)(a) and 3(3)(a)]
1.6 The test compares the payments that a reporting entity receives
for supplies of courier or cleaning services for the period that the report
covers with the entity's relevant GST turnover. Where the payments are
less than 10 per cent of the entity's relevant GST turnover the test is
satisfied. This includes supplies made through a contractor or
subcontractor of the entity, where the consideration for that supply is
received by the reporting entity. [Amendment 1, items 3(2)(a) and 3(3)(a)]
1.7 An entity's relevant GST turnover is either an entity's 'current
GST turnover', or 'projected GST turnover' as worked out in accordance
with the GST Act. If an entity has been operating for more than 12 months
then their 'current GST turnover' is the 'relevant GST turnover' used in
the turnover-threshold test. If an entity has been operating for less than
12 months, then its 'projected GST turnover' is the relevant GST
turnover. In either case, the relevant GST turnover used is the turnover as
of the last day of the period for which the entity would be required to
submit a report with details of the transactions. [Amendment 1, items 3(2)(a),
3(3)(a) and 3(7)]
1.8 Generally, an entity's 'current GST turnover' at a time during a
particular month is the sum of the amount of all the supplies that the entity
has made, or is likely to make, during the 12 months ending at the end of
that month, with certain types of supplies excluded from that calculation
(section 188-15 of the GST Act). An entity's 'projected GST turnover' at
a time during a particular month is the sum of the values of all the
supplies it has made, or is likely to make, during that month and the next
11 months, with certain types of supplies excluded from that calculation
(section 188-20 of the GST Act). [Amendment 1, items 3(2)(a), 3(3)(a) and 3(7)]
1.9 The turnover-threshold test is directed at payments the reporting
entity receives for making supplies of courier or cleaning services. A
supply has the same meaning as it has in the GST Act. There are a number
of ATO rulings which explain what constitutes a supply in particular
circumstances. Where a courier or cleaning service is part of a mixed
supply with other goods or services, only the payment received for the
courier or cleaning service is counted towards the 10 per cent threshold.
The other goods or services that are part of the mixed supply are not
counted towards the 10 per cent threshold. [Amendment 1, items 3(2)(a) and
3(3)(a)]
6
Third party reporting
1.10 Where the courier or cleaning service is part of a composite
supply the dominant part of which is a courier or cleaning service, the
whole of the payment is to be counted towards the 10 per cent threshold.
[Amendment 1, items 3(2)(a) and 3(3)(a)]
1.11 Whether a courier or cleaning service is part of a mixed or
composite supply is a question of fact. There are a number of ATO rulings
which characterise whether a supply is a mixed or composite supply.
No exemption where otherwise required to report details of transactions
1.12 Where an entity would be required to report details of the
transaction because of a separate reporting obligation under
section 396-55 of Schedule 1 to the Taxation Administration Act 1953,
then the exemption does not apply to those transactions. This ensures that
existing reporting obligations are not affected by the exemption.
[Amendment 1, items 3(2)(b), 3(3)(b) and 3(7)]
Choice to lodge a report
1.13 Even where the reporting entity satisfies the turnover-threshold
test and is not otherwise required to report details of the transaction, the
entity may still choose not to be covered by the exemption and to lodge a
report setting out details of the transactions. [Amendment 1, items 3(2)(c),
3(3)(c) and 3(7)]
1.14 An entity is not required to notify the Commissioner before
making a choice whether to give a report. The giving of the report for the
transaction is sufficient evidence of the making of the choice to give the
report. It is not necessary to notify the Commissioner where the entity
intends to rely on the exemption and not prepare and give a report.
[Amendment 1, item 3(6)]
1.15 A choice to report that is made for one report does not restrict an
entity from choosing whether or not to give a report for a later period.
[Amendment 1, items 3(2)(c) and 3(3)(c)]
Exemption is taken to be made under subsection 396-70(4)
1.16 The exemption is taken to have been made under the
Commissioner's power to exempt classes of entities from the requirement
to prepare and give reports, or to prepare and give reports for specified
classes of transactions. [Amendment 1, item 3(1)]
1.17 While the exemption is taken to have been made under
subsection 396-70(4), it is not a legislative instrument. This means that the
exemption is not subject to a range of provisions under the Legislation Act
2003 which would otherwise apply to legislative instruments, such as the
requirement to register a legislative instrument, the requirement that
legislative instruments must be tabled for disallowance, or the requirement
that legislative instruments sunset after a period of time. This is
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Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018
appropriate as the making of the exemption in the primary law is subject
to scrutiny by Parliament. [Amendment 1, item 3(4)]
1.18 Ordinarily, a legislative instrument is not able to contradict or
modify the operation of an Act unless that Act explicitly contemplates that
outcome. Because the exemption is made by an Act of Parliament, a
provision has been inserted to ensure that a new instrument made under
the existing power in subsection 396-70(4) can amend or repeal the
determination that is taken to be made. [Amendment 1, item 3(5)]
1.19 This ensures that there is flexibility to modify the determination
to address any concerns with its operation raised by affected entities in the
future.
8
Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Third party reporting
2.1 These amendments to Schedule 2 to the Bill are compatible with
the human rights and freedoms recognised or declared in the international
instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview
2.2 The amendments to Schedule 2 to the Bill treat the
Commissioner as having exempted entities from the requirement to report
payments to other entities (such as contractors) for courier or cleaning
services where the total amount of payments an entity receives for courier
or cleaning services is less than 10 per cent of the entity's GST turnover.
Human rights implications
2.3 The amendments to Schedule 2 to the Bill do not engage any of
the applicable rights or freedoms.
Conclusion
2.4 The amendments to Schedule 2 to the Bill are compatible with
human rights as they do not raise any human rights issues.
9
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