A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 49) 2000

Overview

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 49) 2000, as amended, was introduced to address the issue of enabling certain recipients to issue tax invoices under the Goods and Services Tax (GST) regime. This legislative instrument was enacted by the Australian Parliament to provide clarity and specific guidelines on when and how a recipient can issue a tax invoice. The policy objective behind this legislation is to streamline the GST compliance process by allowing entities, under certain conditions, to issue tax invoices on their own behalf, thereby enhancing administrative efficiency and reducing the burden on suppliers who might otherwise have to issue the invoices. The determination applies to entities not previously determined as capable of issuing tax invoices for a specific class of taxable supplies, namely defined commission and/or fee-based services. To qualify, a recipient must establish the value of the taxable supply, be registered for GST, and satisfy several other conditions, including having a written agreement with the supplier or an embedded agreement in the tax invoice itself. These agreements must specify that the recipient can issue tax invoices, the supplier will not, and both parties acknowledge their GST registration status and indemnify each other against potential GST liabilities. This legislative instrument aims to ensure compliance with GST laws while providing flexibility in the invoicing process.

Scope and Application

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No 49) 2000 applies to entities that have not previously been determined as capable of issuing a tax invoice, specifically within the context of taxable supplies involving commission and/or fee-based services. This applies to recipients who establish the value of such supplies where the supplier does not provide information to establish the value, and it is commercially impractical for the supplier to determine the value. The recipients must be registered for Goods and Services Tax (GST) when issuing the tax invoice and must satisfy various conditions, including the timely issuance of the tax invoice and adjustment notes to the supplier, compliance with tax obligations, and the presence of a written agreement or an embedded agreement within the tax invoice specifying that the recipient can issue tax invoices for these supplies. The determination provides a clear framework for the issuance of tax invoices by recipients in specific circumstances, ensuring compliance with the tax laws and maintaining the integrity of the GST system. The application of this determination is confined to Commonwealth jurisdiction and does not revoke or vary any previous determinations made by the Commissioner or a delegate of the Commissioner. The determination has been amended over time, most notably by the Recipient Created Tax Invoice – Embedded Agreement Amending Legislative Instrument 2009, which introduced changes to Clause 5 to allow for embedded agreements within recipient created tax invoices. This amendment streamlines the process for recipients to issue tax invoices under the specified conditions, maintaining the balance between administrative ease and regulatory compliance.

Key Provisions

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 49) 2000 (the Determination) provides specific provisions regarding the issuance of tax invoices by recipients in certain circumstances. Section 4 of the Determination allows a recipient to issue a tax invoice for a taxable supply of a defined commission and/or fee-based service under certain conditions. This class of tax invoice may be issued by a recipient if they establish the value of the taxable supply and meet the requirements outlined in Clause 5. Clause 5 sets forth the requirements that must be satisfied by a recipient of a taxable supply. The recipient must be registered for GST at the time of issuing the tax invoice, include the supplier's ABN on the invoice, issue the original or a copy of the tax invoice to the supplier within 28 days of making or determining the value of the taxable supply, and retain the original or a copy of the invoice. The recipient must also issue an adjustment note to the supplier within 28 days of any adjustment and retain a copy. Additionally, the recipient must reasonably comply with their obligations under the taxation laws and have either a written agreement with the supplier or an agreement embedded in the recipient created tax invoice (RCTI). This agreement must specify the supplies to which it relates, confirm that the recipient can issue tax invoices for these supplies, and ensure that the supplier will not issue tax invoices for these supplies. The agreement must also include acknowledgments of GST registration and indemnification provisions. The Determination imposes several obligations on the parties involved. For the recipient, the primary obligation is to adhere to the requirements specified in Clause 5. This includes being registered for GST, issuing the tax invoice and any adjustment notes within the stipulated timeframes, and ensuring compliance with the taxation laws. The recipient must also have a written agreement with the supplier or an embedded agreement within the RCTI that meets the criteria outlined in Clause 5(f). For the supplier, the obligation is to refrain from issuing tax invoices for the specified supplies if they have agreed to let the recipient issue the tax invoice, and to notify the recipient if they cease to be registered for GST. Breaching the provisions of the Determination can lead to civil and criminal consequences. While the Determination does not explicitly outline penalties, breaches of the A New Tax System (Goods and Services Tax) Act 1999, under which this Determination is made, can result in penalties. For example, under the GST Act, failure to comply with tax invoice requirements can result in a civil penalty of up to 25% of the GST attributable to the non-compliant tax invoice, with additional penalties for ongoing non-compliance. Criminal penalties, including fines and imprisonment, may apply for serious or repeated breaches. The exact penalties depend on the nature and severity of the breach and are governed by the broader provisions of the GST Act.