EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 175
Issued by authority of the Minister for Revenue and Assistant Treasurer
A New Tax System (Goods and Services Tax) Act 1999
A New Tax System (Goods and Services Tax) Amendment Regulations 2007 (No. 1)
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 amending Regulations is to amend the A New Tax System (Goods and Services Tax) Regulations 1999 (the Principal Regulations) to specify the maximum value of acquisitions for which a tax invoice is not required as $75 (excluding goods and services tax (GST)).
Tis changes is part of a package of measures to assist small business and reduce compliance costs announced on 8 May 2007 as part of the 2007-08 Budget.
Subsection 29-80(1) of the Act provides that it is not necessary to hold a tax invoice to claim an input tax credit for a creditable acquisition relating to a taxable supply with a value not exceeding $50 (excluding GST), or such higher amount as the regulations specify. Subsection 29-80(1) also provides that the requirement to issue a tax invoice at the request of a purchaser does not apply in relation to these supplies. The amending Regulations specify the higher amount of $75 (excluding GST).
This allows businesses to obtain input tax credits for these minor expenses without needing to obtain a tax invoice.
Consultation was not undertaken, as the amending Regulations are of a mechanical nature and do not substantially alter the previous arrangements.
The Regulations commenced on 1 July 2007.
Overview
The A New Tax System (Goods and Services Tax) Amendment Regulations 2007 (No. 1) were issued under the authority of the Minister for Revenue and Assistant Treasurer, amending the A New Tax System (Goods and Services Tax) Regulations 1999. This amendment was enacted to address the need to reduce compliance costs for small businesses, aligning with the policy objectives outlined in the 2007-08 Budget. Specifically, the Regulations modify Section 177-15 of the A New Tax System (Goods and Services Tax) Act 1999 by raising the threshold for the maximum value of acquisitions exempt from the requirement of a tax invoice from $50 to $75 (excluding GST). This change allows small businesses to claim input tax credits for minor expenses without needing to obtain a tax invoice, thereby easing administrative burdens and promoting efficiency in tax compliance. The amendment commenced on 1 July 2007, with no consultation deemed necessary as it was considered a mechanical change without significant alteration to existing arrangements.
Scope and Application
The A New Tax System (Goods and Services Tax) Amendment Regulations 2007 (No. 1) primarily concern the alteration of the threshold for tax invoice requirements under the A New Tax System (Goods and Services Tax) Act 1999. This Act applies to all businesses and individuals engaged in taxable supplies within Australia, including those operating across various industries. The amendment specifically affects the input tax credit claim process for small businesses by raising the threshold for taxable acquisitions that require a tax invoice from $50 to $75 (excluding GST). This change aims to alleviate compliance costs for small businesses and was introduced as part of a broader fiscal package announced in the 2007-08 Budget. The geographic reach of these regulations is national, applying uniformly across Australia. The Act and its subordinate regulations are designed to streamline tax processes for small businesses while ensuring compliance with the broader tax framework.
Key Provisions
The main operative sections of the A New Tax System (Goods and Services Tax) Amendment Regulations 2007 (No. 1) (the Amending Regulations) pertain to the alteration of the maximum value of acquisitions for which a tax invoice is not required, as set forth in Section 29-80(1) of the Act. The Regulations specify this maximum value as $75 (excluding GST), an increase from the previously stipulated amount. This adjustment is intended to streamline tax compliance for small businesses by allowing them to claim input tax credits without the necessity of obtaining a tax invoice for acquisitions up to the new threshold. The regulations also state that a tax invoice is not required for creditable acquisitions relating to taxable supplies with a value not exceeding $75 (excluding GST), thereby easing the administrative burden on small enterprises.
The Amending Regulations impose specific obligations on businesses, particularly small enterprises, by lowering the threshold for tax invoice requirements. Businesses must ensure that their acquisitions do not exceed the new threshold of $75 (excluding GST) to be eligible for input tax credits without a tax invoice. Additionally, businesses are required to maintain accurate records of their acquisitions and input tax credits to facilitate compliance with the Act and to ensure that they are eligible for the input tax credit provisions. The Act also mandates that businesses comply with the new requirements starting from the commencement date of the Regulations, which is 1 July 2007.
Failure to comply with the provisions of the Amending Regulations may result in civil or criminal consequences. Although the explanatory statement does not detail specific offences or penalties, it is implied that breaches of the Act or the regulations could result in penalties under the general provisions of the A New Tax System (Goods and Services Tax) Act 1999. These penalties may include fines or other sanctions as prescribed by the Act. The exact penalties would depend on the nature and severity of the breach, and could potentially include both civil and criminal liabilities depending on whether the breach is considered an offence under the Act.