A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoices Determination (No. 1) 2006

Administered by Department of the Treasury

Legislation au F2006L03480 Not in force Legislative Instrument

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A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2006

 

as amended

made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 and subsection 4(1) of the Acts Interpretation Act 1901.

This compilation was prepared on 18 May 2009
taking into account amendments up to Recipient Created Tax Invoice – Embedded Agreements Amending Legislative Instrument 2009

 

Prepared by the Goods and Services Tax Centre of Expertise,
Australian Taxation Office

 

 

Citation (see Note 1)

  1. This determination may be cited as Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No 1) 2006.

Commencement (see Note 1)

2. (1) This determination commences on 1 December 2006.

 (2) This determination does not revoke or vary any previous determination made by the Commissioner or a delegate of the Commissioner.

Application

3. This determination applies to an entity not determined previously as being able to issue a tax invoice belonging to a class of tax invoices that may be issued by a recipient.

Who is covered by this Determination

4. This determination applies to an entity, which acquires Demand Side Response (DSR) as a taxable supply from a registered entity.

Classes of tax invoices that may be issued by the recipient of a taxable supply

5. An aggregator of DSR, who is a recipient of a taxable supply of DSR from a registered entity, may issue a tax invoice that belongs to a class of tax invoices for a taxable supply of DSR, where the following circumstances exist:

a)                     the recipient of DSR is registered for GST;

b)                     the recipient supplies aggregated DSR to electricity retailers, network service providers and other users of aggregated DSR;

c)                      the recipient establishes the value of the DSR acquired from the DSR supplier; and

d)                     the recipient satisfies the requirements set out in Clause 6.

Requirements that must be satisfied by the recipient of a taxable supply of DSR

6. A recipient of a taxable supply of DSR must satisfy the following requirements

a)                     the recipient must be registered for GST when the invoice is issued;

b)                     the recipient must set out in the tax invoice the Australian Business Number of the supplier;

c)                      the recipient must issue the original or a copy of the tax invoice to the supplier within 28 days of making or determining the value of a taxable supply and must retain the original or the copy;

d)                     the recipient must issue the original or a copy of an adjustment note to the supplier within 28 days of the adjustment and must retain the original or the copy;

e)                     the recipient must reasonably comply with its obligations under the taxation laws;

f)                        the  recipient must have either:

  • a written agreement with the supplier specifying the supplies to which it relates, that is current and effective when the RCTI is issued, agreeing that:

(i)                 the recipient can issue tax invoices in respect of the supplies;

(ii)                the supplier will not issue tax invoices in respect of the supplies;

(iii)              the supplier acknowledges that it is registered for GST when it enters into the agreement and that it will notify the recipient if it ceases to be registered; 

(iv)             the recipient acknowledges that it is registered when it enters into the agreement and that it will notify the supplier if it ceases to be registered for GST; and

(v)               the recipient indemnifies the supplier for any liability for GST and penalty that may arise from an understatement of the GST payable on any of the specified supplies received on a tax invoice the recipient issues; or

  • an agreement with the supplier embedded in an RCTI it issues that contains the following statement:

The recipient and the supplier declare that this agreement applies to supplies to which this tax invoice relates. The recipient can issue tax invoices in respect of these supplies. The supplier will not issue tax invoices in respect of these supplies. The supplier acknowledges that it is registered for GST and that it will notify the recipient if it ceases to be registered. The recipient acknowledges that it is registered for GST and that it will notify the supplier if it ceases to be registered for GST. The recipient indemnifies the supplier for any liability for GST and penalty that may arise from an understatement of the GST payable on any of the specified supplies received on a tax invoice the recipient issues. Acceptance of this RCTI constitutes acceptance of the terms of this written agreement.

Both parties to this supply agree that they are parties to an RCTI agreement. The supplier agrees to notify the recipient if the supplier does not wish to accept the proposed agreement within 21 days of receiving this document.


Definitions

7. (1) The following expressions are defined for the purposes of this determination:

recipient means an entity that acquires DSR from registered electricity consumers, aggregates it and sells it to electricity retailers, network service providers and other users of DSR.

Demand Side Response (DSR) means the measures taken by electricity consumers to reduce their demand from the electricity network at peak times.

supplier means an electricity consumer, who enters into a written agreement with a DSR aggregating entity to supply DSR as and when requested by the aggregating entity.

(2) Other expressions in this determination have the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999.

 

Notes to the A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2006

Note 1

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2006 (in force under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999) as shown in this compilation is amended as indicated in the Tables below.

Table of Instruments

Title

Date of FRLI registration

Date of
commencement

A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2006

23 October 2006

(see F2006L03480)

1 December 2006

Recipient Created Tax Invoice – Embedded Agreement Amending Legislative Instrument 2009

14  May 2009

(see F2009L01772)

1 July 2009

Table of Amendments

ad. = added or inserted      am. = amended      rep. = repealed      rs. = repealed and substituted

Provision affected

How affected

Clause 6

am. (F2009L01772)

 

 

Overview

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2006, as amended, was enacted to address the issue of recipient-created tax invoices in the context of Demand Side Response (DSR) transactions within the goods and services tax (GST) framework. This legislative instrument was made under the authority of subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 and subsection 4(1) of the Acts Interpretation Act 1901. The determination aims to clarify the circumstances under which a recipient of a taxable supply of DSR can issue a tax invoice. Specifically, it applies to entities that acquire DSR as a taxable supply from registered entities and permits the recipient to issue a tax invoice if certain conditions are met, including the recipient being registered for GST and entering into an agreement with the supplier. This legislative instrument was prepared by the Goods and Services Tax Centre of Expertise within the Australian Taxation Office and commenced on 1 December 2006.

Scope and Application

The A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No 1) 2006 applies to entities that are recipients of Demand Side Response (DSR) as a taxable supply from registered entities. Specifically, it applies to aggregators of DSR, who are recipients of a taxable supply of DSR from a registered entity, and who can issue a tax invoice that belongs to a class of tax invoices for a taxable supply of DSR under certain conditions. These conditions include the recipient being registered for GST, supplying aggregated DSR to electricity retailers, network service providers, and other users of aggregated DSR, establishing the value of the DSR acquired from the DSR supplier, and satisfying the requirements set out in Clause 6 of the determination. The recipient must also comply with specific obligations such as issuing the original or a copy of the tax invoice to the supplier within 28 days of making or determining the value of a taxable supply, and reasonably complying with their obligations under the taxation laws. The determination applies across Australia, as it is made under the Commonwealth Goods and Services Tax Act. This determination does not revoke or vary any previous determinations made by the Commissioner or a delegate of the Commissioner. It was amended by the Recipient Created Tax Invoice – Embedded Agreements Amending Legislative Instrument 2009, which introduced the option of having an embedded agreement within the tax invoice itself.

Key Provisions

The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No 1) 2006 (the Determination) provides specific rules under the A New Tax System (Goods and Services Tax) Act 1999 for entities that can issue tax invoices on certain supplies. The Determination is designed to streamline the issuance of tax invoices by recipients of Demand Side Response (DSR) from registered entities. According to section 5, an aggregator of DSR can issue a tax invoice if the recipient is registered for GST, supplies aggregated DSR to electricity retailers, network service providers, and other users, establishes the value of the DSR acquired, and meets the requirements set out in Clause 6. The recipient must also ensure that they comply with the obligations outlined in Clause 6 to issue a valid tax invoice. The Determination imposes several obligations on entities that can issue tax invoices under its provisions. Firstly, the recipient must be registered for GST at the time of issuing the invoice (Clause 6(a)). Secondly, the tax invoice must include the Australian Business Number of the supplier (Clause 6(b)). Additionally, the recipient must provide the supplier with either an original or a copy of the tax invoice within 28 days of making or determining the value of the taxable supply, and retain a copy for their records (Clause 6(c)). Similarly, any adjustments to the invoice must be communicated to the supplier within 28 days, with the recipient retaining a copy of the adjustment note (Clause 6(d)). The recipient must also comply with their GST obligations (Clause 6(e)). Furthermore, the recipient must either have a written agreement with the supplier or an embedded agreement in the tax invoice specifying the supplies to which it relates, and detailing the roles and responsibilities of both parties, including indemnification for any understatement of GST (Clause 6(f)). Breaching the obligations set out in the Determination can lead to various consequences. While the Determination does not explicitly state penalties, violations of the requirements may result in the tax invoice being deemed invalid for GST purposes. This could potentially lead to disputes over the supply of DSR, with implications for both the recipient and the supplier. Additionally, if the recipient fails to comply with their GST obligations, they may be subject to penalties under the A New Tax System (Goods and Services Tax) Act 1999, which can include fines and interest on any unpaid GST. It is important for entities to adhere to the requirements to avoid any potential civil or criminal consequences.

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