A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 9) 2000

Overview

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 9) 2000, as amended, was enacted to address the gap in the legislation concerning the issuance of tax invoices by recipients rather than suppliers, particularly in the context of direct selling and recruiting distributor arrangements. The legislation was enacted by the Australian Parliament and aims to provide clarity and certainty around the circumstances under which a recipient can issue a tax invoice for a taxable supply. This determination applies to entities not previously determined as being able to issue a recipient created tax invoice (RCTI), allowing Direct Selling Association of Australia Inc (DSAA) members, as recipients of a taxable supply, to issue a tax invoice for a taxable supply by a recruiting distributor, provided certain conditions are met. These conditions include establishing the value of the supply, satisfying registration and notification requirements, and adhering to obligations under the taxation laws. The determination was prepared by the Goods and Services Tax Centre of Expertise, Australian Taxation Office, and has been amended to include an embedded agreement provision. The objective of the legislation is to ensure that both the recipient and the supplier comply with their respective obligations under the taxation laws, including the timely issuance of tax invoices and adjustment notes, and to provide a framework for the issuance of RCTIs in specific business models, such as direct selling and recruiting distributor arrangements. This determination plays a crucial role in maintaining the integrity of the GST system by ensuring that tax invoices are issued correctly and in accordance with the law.

Scope and Application

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 9) 2000 applies to entities, specifically members of the Direct Selling Association of Australia Inc (DSAA), who are recipients of a taxable supply and are not previously determined as being able to issue a tax invoice belonging to a class of tax invoices that may be issued by a recipient. This determination operates under the Commonwealth of Australia, as it is made under the authority of the A New Tax System (Goods and Services Tax) Act 1999 and the Acts Interpretation Act 1901. The scope of the Act is to facilitate the issuance of recipient created tax invoices (RCTI) by DSAA members who are recipients of a taxable supply by a recruiting distributor, provided they meet certain criteria. These criteria include establishing the value of the supply, satisfying the specific requirements outlined in the determination, and ensuring compliance with their obligations under the taxation laws. The determination also sets out the conditions for the issuance of RCTIs, including the necessity for both parties to be registered for GST, the exchange of tax invoice details, and the retention of relevant documents. The Act allows for modifications and extensions through subordinate instruments, such as the Recipient Created Tax Invoice – Embedded Agreement Amending Legislative Instrument 2009, which amends the original determination.

Key Provisions

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 9) 2000 (the "Determination") specifies the classes of tax invoices that can be issued by recipients, particularly members of the Direct Selling Association of Australia Inc (DSAA) in respect of taxable supplies made by recruiting distributors. Section 4 of the Determination allows a DSAA member who is the recipient of a taxable supply to issue a tax invoice if certain conditions are met, such as establishing the value of the supply and satisfying the requirements outlined in Clause 5. These requirements include ensuring both the supplier and recipient are registered for Goods and Services Tax (GST), issuing the tax invoice within 28 days of the value of the supply being made or determined, and having a written agreement or embedded agreement with the supplier that specifies the supplies and allows the recipient to issue the tax invoice. The obligations imposed on the parties by the Determination include ensuring both the supplier and recipient are GST-registered when the invoice is issued, with the recipient having to set out the supplier's Australian Business Number (ABN) on the tax invoice. The recipient must also 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 copy. Additionally, the recipient must reasonably comply with their obligations under the taxation laws and have either a written agreement or an embedded agreement with the supplier that specifies the supplies and allows the recipient to issue the tax invoice. The supplier must acknowledge their GST registration and the recipient must acknowledge their GST registration, with both parties required to notify the other if they cease to be registered for GST. Failure to comply with the requirements of the Determination can result in penalties and other consequences. While specific penalties are not detailed in the Determination, breaches of the A New Tax System (Goods and Services Tax) Act 1999 or associated regulations can result in both civil and criminal penalties. Civil penalties can include fines and the requirement to pay back taxes, interest, and other amounts. Criminal penalties can include imprisonment, particularly for serious or repeated breaches. The Determination itself does not specify maximum penalties, but the broader legislative framework under which it operates does provide for significant penalties for non-compliance.