A New Tax System (Goods and Services Tax) Amendment Regulations 2001 (No. 1) (Cth)

A New Tax System (Goods and Services Tax) Amendment Regulations 2001 (No. 1)1

Statutory Rules 2001 No. 482

I, WILLIAM PATRICK DEANE, Governor-General of the Commonwealth of Australia, acting with the advice of the Federal Executive Council, make the following Regulations under the A New Tax System (Goods and Services Tax) Act 1999.

Dated 8 March 2001

WILLIAM DEANE

Governor-General

By His Excellency’s Command

C. R. KEMP

Assistant Treasurer

1Name of Regulations

 These Regulations are the A New Tax System (Goods and Services Tax) Amendment Regulations 2001 (No. 1).

2Commencement

• These Regulations are taken to have commenced on 1 July 2000.  

3Amendment of A New Tax System (Goods and Services Tax) Regulations 1999

Schedule 1 amends the A New Tax System (Goods and Services Tax) Regulations 1999.

Schedule 1Amendments

  

(regulation 3)

[1]After regulation 70-5.01

insert

70-5.01ADefinition

 In this Division, an enterprise is closely related to another enterprise if any of the following conditions apply:

• (a)

  both enterprises are carried on by the same entity;

• (b)

  one enterprise is carried on by a 100% subsidiary of the entity that carries on the other enterprise;

• (c)

  both enterprises are carried on by 100% subsidiaries of the same entity.

[2]Regulation 70-5.02, heading

substitute

70-5.02Acquisitions that attract reduced input tax credits: general (Act s 70-5)

[3]After regulation 70-5.02

insert

70-5.02AAcquisitions that attract reduced input tax credits: certain offshore supplies (Act s 70‑5)

• (1)

  For subsection 70-5 (1) of the Act, an acquisition mentioned in regulation 70-5.02B that relates to making financial supplies gives rise to an entitlement to a reduced input tax credit (is a reduced credit acquisition) if:

  • (a)

    the supply or transfer that gives rise to the acquisition (the relevant supply):

    • (i)

      consists in:

      • (A)

        the transfer of something to an enterprise in Australia (the receiving enterprise) from an enterprise outside Australia (the supplying enterprise); or

      • (B)

        the doing of something for the receiving enterprise by the supplying enterprise; and

    • (ii)

      is a taxable supply because of section 84-5 of the Act (including supply that is not connected to Australia because of section 84-15 of the Act); and

  • (b)

    the receiving enterprise and the supplying enterprise are closely related.

• (2)

  In determining the reduced credit acquisition, the price of the relevant supply is reduced by the amount passed on by the supplying enterprise to the receiving enterprise for any unabsorbed contribution from a third party (see regulation 70-5.02C). 

70-5.02BReduced credit acquisitions

• (1)

  The following acquisitions may be reduced credit acquisitions under regulation 70-5.02A:

Item	Reduced credit acquisition
Senior executive management
1	Provision of senior management services, including: (a) corporate strategy and development; and (b) investment strategy and performance measurement functions; and (c) profit or business centre performance support
2	Provision of support systems associated with the provision of senior management services
Human resources support
3	Provision of human resources support services, including: (a) general advice and planning; and (b) recruitment assistance; and (c) compensation advice and management; and (d) training
4	Processing and maintenance of employee data and files
Corporate marketing and communications
5	Provision of corporate information and communication services
6	Provision of marketing administration and media support services
Financial management
7	Performance of financial management service functions, including: (a) tax law compliance; and (b) corporate treasury operations; and (c) financial control (including statutory reporting and accounting policy); and (d) general ledger account reporting functions, including paying and processing invoices and payment instructions; and (e) internal audit functions; and (f) management reporting systems; and (g) setting intrabank transfer pricing policy; and (h) corporate insurance; and (i) centralised payroll functions
Supply procurement and management
8	Process and management services for the procurement of supplies
Credit, operational and risk management
9	Establishment and application of credit policy
10	Development, establishment and application of policies, monitoring systems and procedures to manage market and operational risk
11	Development and application of security processes related to fraud prevention
Relationship management
12	Provision of supervision, monitoring and management services in support of client relationships
In-house legal services
13	Provision of legal services, including: (a) company secretary functions; and (b) regulatory and legal compliance
Technology systems
14	Provision of systems development and computer programming services
15	Maintenance and operation of transaction processing systems (including communications and applications systems)
16	Development and maintenance of disaster recovery systems
Business services
17	Provision of transport, security and mail services
18	Property management

• (2)

  However, something that is used in making a reduced credit acquisition is not, for that reason, a reduced credit acquisition.

Examples for subregulation (2)

1 Consultant’s services used in the provision of recruitment services.

2 Labour hire services used in the provision of security services.

70-5.02CUnabsorbed contribution

 For subregulation 70-5.02A (2), the performance by a third party, on behalf of the supplying enterprise or a closely related enterprise of the supplying enterprise, of all or part of the relevant supply is an unabsorbed contribution if:

• (a)

  the amount paid or payable, or part of the amount paid or payable, by the supplying enterprise for the performance is passed on by the supplying enterprise to the receiving enterprise as part of the price of the relevant supply; and

• (b)

  the enterprise carried on by the third party is not closely related to the supplying enterprise; and

• (c)

  the thing that is involved in the performance by the third party retains, at the time of the relevant supply, the substance and character that it had when first purchased, for the purposes of the relevant supply, by an entity that carries on an enterprise that is closely related to the supplying enterprise.

Example for paragraph (c):

Legal advice that is given in the following circumstances is an unabsorbed contribution:

• •

  the advice is acquired by the supplying enterprise from a third party service provider as part of the provision of in-house legal services by the supplying enterprise to its 100% subsidiary in Australia;

• •

  the external legal service provider is not closely related to the supplying enterprise;

• •

  the advice is passed on to the 100% subsidiary in Australia by the supplying enterprise;

• •

  the amount paid or payable for the advice is passed on to the 100% subsidiary in Australia as part of the price that the supplying enterprise charges for the provision of in-house legal services. 

70-5.02DProhibition against claiming twice

• To avoid doubt, an entity is not entitled to a reduced input tax credit under regulations 70-5.02 and 70‑5.02A for the same acquisition.  

[4]Dictionary, before definition of ABN

insert

100% subsidiary — see the Dictionary in Part 6-3 of the Act.

Notes

1. These Regulations amend Statutory Rules 1999 No. 245, as amended by 2000 Nos. 49, 77, 89, 110, 268 and 363.

2. Notified in the Commonwealth of Australia Gazette