A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2)

Administered by Department of the Treasury

Legislation au F2013L00202 Regulations Not in force Legislative Instrument

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EXPLANATORY STATEMENT

Select Legislative Instrument 2013 No. 7

Issued by authority of the Assistant Treasurer

A New Tax System (Goods and Services Tax) Act 1999

A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2)

Section 177-15 of the A New Tax System (Goods and Services Tax) Act 1999 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

The purpose of the Regulation is to amend the A New Tax System (Goods and Services Tax) Regulations 1999 (the Regulations) to ensure consistency within the Regulations by updating the examples for guarantees and indemnities to reflect that they are now considered as separate interests.

The A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 1) made a number of amendments to the GST financial supply provisions in the Regulations that commenced on 1 July 2012.  These amendments included the listing of guarantees and indemnities as separate items in subregulation 40-5.09(3) of the Regulations.  However, the relevant examples for guarantees and indemnities contained in Part 5 in Schedule 7 to the Regulations were not also amended to reflect these changes.

The amending Regulation separates the examples for guarantees and indemnities by moving the example regarding indemnities from Part 5 in Schedule 7 to the GST Regulations to a new Part (Part 5A) in the Schedule.

The Act specifies no conditions that need to be met before the power to make the Regulation may be exercised.

This amendment was raised as an issue in the Treasury Tax Issues Entry System (TIES).  Consultation on this matter was undertaken through the TIES Working Group.

The Regulation commences the day after its registration on the Federal Register of Legislative Instruments.


ATTACHMENT

Details of the proposed A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2)

Section 1 – Name of Regulation

This section provides that the name of the Regulation is the A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2).

Section 2 – Commencement

This section provides that the Regulation commences the day after its registration on the Federal Register of Legislative Instruments.

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

This section provides that the Regulation amends the A New Tax System (Goods and Services Tax) Regulations 1999 (the Regulations).

 

SCHEDULE 1 – AMENDMENTS

Background

Subregulation 40-5.09(3) of the Regulations lists guarantees and indemnities as separate items. 

The amending Regulation makes some changes to the examples given in the financial supply provisions in the Regulations.

Change to the examples

Item [1] – Schedule 7, Part 5, item 1
Item [2] – Schedule 7, Part 5, items 2 and 3
Item [3] – Schedule 7, after Part 5

Existing items 7 and 7A define guarantees and indemnities as legally distinct arrangements.  However, Schedule 7 of the Regulations still lists the examples for guarantees and indemnities together.  Grouping these examples together leads to inconsistency within the Regulations and could cause confusion.

Item [1] omits existing item 1, the example concerning indemnities, of Part 5 of Schedule 7 of the Regulations.

Item [2] renumbers item 2 and 3 of Part 5 of Schedule 7 of the Regulations to items 1 and 2, following the omission of the existing item 1.

Item [3] inserts new Part 5A after Part 5 of Schedule 7 to the Regulations to list the example for indemnities separately from the example for guarantees. 

It is not intended that these amendments change the existing interpretation of the terms guarantee or indemnity as set out in the Regulations.  The amendments merely ensure consistency within the Regulations and confirm the existing treatment.

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2)

 

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Legislative Instrument

The purpose of the Legislative Instrument is to amend the A New Tax System (Goods and Services Tax) Regulations 1999 (the Regulations) to ensure consistency in the Regulation by updating the examples for guarantees and indemnities.

 

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

Overview

The A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2) was enacted to address inconsistencies within the A New Tax System (Goods and Services Tax) Regulations 1999 (the Regulations). Specifically, it aimed to separate the examples for guarantees and indemnities to reflect their distinct status as financial supplies. This regulation was issued by authority of the Assistant Treasurer, in accordance with the powers granted under Section 177-15 of the A New Tax System (Goods and Services Tax) Act 1999. The policy objective was to ensure consistency and clarity in the interpretation of financial supplies under the GST framework, thereby preventing potential confusion or misinterpretation by taxpayers and regulators. The amendment was identified through the Treasury Tax Issues Entry System (TIES) and was subject to consultation with relevant stakeholders through the TIES Working Group.

Scope and Application

The A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2) applies to entities and individuals engaged in financial supplies that involve guarantees and indemnities within the Commonwealth of Australia. It is a regulatory instrument that amends the A New Tax System (Goods and Services Tax) Regulations 1999, specifically addressing the classification and treatment of guarantees and indemnities under the GST framework. The regulation seeks to rectify inconsistencies by treating guarantees and indemnities as separate interests, thereby ensuring clearer and more consistent application of the GST provisions. The changes made do not alter the fundamental interpretation of guarantees and indemnities but are intended to streamline and clarify the regulatory text. This amendment follows the initial classification introduced in the A New Tax System (Goods and Services Tax) Amendment Regulation 2012 (No. 1), which listed guarantees and indemnities separately but failed to update the corresponding examples in the Regulations. The Regulation comes into effect the day after its registration on the Federal Register of Legislative Instruments and does not impose any specific conditions for its application.

Key Provisions

The A New Tax System (Goods and Services Tax) Amendment Regulation 2013 (No. 2) amends the A New Tax System (Goods and Services Tax) Regulations 1999 (Regulations) to ensure consistency by updating the examples of guarantees and indemnities. Under section 3 of the Regulation, these amendments focus on clarifying the examples listed in Schedule 7 of the Regulations. Specifically, existing items 7 and 7A already treat guarantees and indemnities as distinct, but the examples within Schedule 7 still grouped them together, causing potential confusion and inconsistency. To rectify this, item [1] of the Regulation omits the existing item 1 of Part 5 of Schedule 7, which pertains to indemnities. Items [2] and [3] then renumber the remaining items and insert a new Part 5A to separate the example for indemnities from that of guarantees. The Regulation imposes specific obligations on those governed by the Regulations. These include ensuring that any guarantees or indemnities provided or received are correctly identified and classified in accordance with the amended examples. The amendments do not alter the fundamental interpretation of guarantees and indemnities as distinct legal arrangements, but they do clarify the presentation of examples within the Regulations. This should assist in reducing confusion and ensuring compliance with the financial supply provisions outlined in subregulation 40-5.09(3) of the Regulations. Failure to comply with the provisions of the amended Regulations could result in various consequences. Under the A New Tax System (Goods and Services Tax) Act 1999, breaches of the GST provisions may lead to both civil and criminal penalties. Civil penalties include the imposition of a GST shortfall amount, which is typically calculated based on the value of the non-compliant transaction. Additionally, the Commissioner of Taxation may impose a penalty equal to the amount of GST shortfall. Criminal penalties could be applied for more serious breaches, including fines of up to $22,200 for individuals and higher amounts for corporations, alongside potential imprisonment terms. These penalties underscore the importance of adhering to the regulatory requirements set out by the amended Regulations.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.