COMMONWEALTH OF AUSTRALIA
A NEW TAX SYSTEM (GOODS AND SERVICES TAX) ACT 1999
DETERMINATION
Under subsection 29-25(1) of the A New Tax System (Goods and Services Tax) Act 1999 ("the GST Act"), I make the following determination, being satisfied under paragraph 29-25(2)(b) of the Act that it is necessary to prevent the provisions of Division 29 and Chapter 4 applying in a way that is inappropriate in circumstances involving a prepayment for a telephone supply occurring before the use or enjoyment of that telephone supply occurs.
Citation
- This determination may be cited as the A New Tax System (Goods and Services Tax) Act 1999 (particular attribution rules for prepayments for telephone supplies) Determination (No. 1) 2001.
Commencement
2. This determination commences on the date the GST Act commences.
Application of Determination
3. This determination applies to a telephone supply made on or after the commencement of the GST Act by an entity that:
(a) is a telecommunications provider, and
(b) receives a payment from a customer for the supply (whether before or after the supply has occurred) before an invoice is issued in relation to that supply, and
(c) does not account on a cash basis.
Particular attribution rule for GST payable on a telephone supply for which payment is made prior to use or enjoyment of that supply occurring.
4. The GST payable on a telephone supply made by a telecommunications provider is attributable to:
(a) if an invoice is issued in relation to that supply – the tax period in which that invoice is issued; or
(b) the tax period in which an invoice would have been issued by the supplier in relation to that supply if the recipient had not made the prepayment;
whichever is the earlier.
Definitions
5. For the purposes of this determination:
(a) prepayment means a payment made by a customer of a telecommunications provider for a telephone supply that is made either before the supply has occurred, or after the supply has occurred and before the provider has issued an invoice for the supply as part of its regular billing cycle.
This is page 2 of the A New Tax System(Goods and Services Tax) Act 1999 (particular attribution rules for prepayments for telephone supplies) Determination (No. 1) 2001.
(b) telecommunications provider means an entity that makes supplies of telephone services available to the public for a fee.
(c) telephone services include telephone calls, access to networks that allow telephone calls to be made or received, other services that are related to network access – for example directory listings or silent number facility – and provision of leased equipment that enables network access – for example, telephone handsets or PABX equipment.
(d) telephone supply means a taxable supply of a telephone service.
Other expressions in this determination have the same meaning as in the GST Act.
6. To avoid doubt, this Determination does not override subsection 29-10(3), subsection 29-20(3), Division 57, Division 153 or Division 156 of the GST Act.
Signed this 22 th day of August 2001.
Signed by Michael Hardy
ASSISTANT COMMISSIONER OF TAXATION
Goods and Services Tax
Overview
The A New Tax System (Goods and Services Tax) Act 1999 was enacted to introduce a uniform system of goods and services tax across Australia, replacing a range of previous indirect taxes and providing a significant source of revenue for the Commonwealth. This Act was introduced to address the need for a streamlined and coherent national tax system, aiming to simplify the tax structure and reduce the burden on businesses. The Act was enacted by the Parliament of Australia, with a policy objective to create a broad-based, efficient, and transparent tax system that would contribute to economic growth and stability. The A New Tax System (Goods and Services Tax) Act 1999 (particular attribution rules for prepayments for telephone supplies) Determination (No. 1) 2001 further refines the application of the GST Act by addressing specific issues related to prepayments for telephone supplies, ensuring that the tax is appropriately allocated in such scenarios.
Scope and Application
The A New Tax System (Goods and Services Tax) Act 1999 (particular attribution rules for prepayments for telephone supplies) Determination (No. 1) 2001 applies to telecommunications providers that supply telephone services and receive payments from customers for these services prior to issuing an invoice, provided they do not account on a cash basis. This legislation is designed to address the specific issue of GST applicability when prepayments for telephone supplies are made before the use or enjoyment of those supplies. The scope of this determination is limited to the attribution of GST in scenarios involving prepayments for telephone supplies, ensuring that the GST is appropriately attributed to the correct tax period, which is either the period in which the invoice is issued or the period in which the invoice would have been issued if no prepayment had occurred. This legislation has a national jurisdictional reach across Australia as it is a Commonwealth Act. It does not override other specified sections of the GST Act, ensuring that other provisions remain intact and applicable.
Key Provisions
The main sections of the A New Tax System (Goods and Services Tax) Act 1999 (particular attribution rules for prepayments for telephone supplies) Determination (No. 1) 2001 pertain to the attribution of GST for prepayments made by customers for telephone supplies. Under section 4, the GST on a telephone supply is attributable to the tax period in which the invoice is issued, or the period in which an invoice would have been issued if the prepayment had not occurred, whichever is earlier. This rule is designed to ensure that GST is attributed appropriately in cases where payments are made before the supply of the telephone service has been used or enjoyed. Section 3 specifies the conditions under which this determination applies: it applies to supplies made by telecommunications providers who receive payments before issuing an invoice and do not account on a cash basis.
The obligations imposed by this determination are primarily on telecommunications providers who fall within the definition set out in section 5(b). They must ensure that the GST on telephone supplies for which prepayments are made is attributed correctly in accordance with the rules outlined in section 4. This includes keeping accurate records and ensuring that any prepayments are accounted for in the appropriate tax period. Additionally, these entities must issue invoices that reflect the correct attribution of GST, which is a crucial part of their compliance with the GST Act.
Failure to comply with the provisions of this determination can result in significant consequences. While the determination itself does not specify particular offences or penalties, the overarching GST Act outlines a range of potential civil and criminal penalties for non-compliance. For instance, under section 28-5 of the GST Act, an entity that fails to comply with its obligations can be subject to a civil penalty of up to $21,000 per offence. Furthermore, if an entity knowingly or recklessly makes a false statement or representation, it can be subject to criminal penalties, including fines of up to $126,000 for individuals and $630,000 for corporations, as well as imprisonment for up to five years. The seriousness of these penalties underscores the importance of adhering to the rules set out in this determination and the broader GST Act.