EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 206
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 Regulations 2010 (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 remove the requirements previously specified for documents to be tax invoices or recipient-created tax invoices.
Tax invoices play an important role in the GST system. They are the mechanism by which the GST treatment adopted by a supplier is communicated to a recipient and reconciled with their treatment of an acquisition.
Section 29-70 of the Act provides that entities making a taxable supply must issue a tax invoice to the recipient of the supply within 28 days after being requested by the recipient. Section 29-10 of the Act provides that an entity must, generally, hold a tax invoice before claiming an input tax credit.
The requirements for a document to be a tax invoice are set out in section 29-70 of the Act. They include the requirement that the document must contain such other information as the regulations specify. A number of requirements were specified in regulations 29-70.01 and 29-70.02 of the Principal Regulations.
Following Royal Assent to the amendments contained in Schedule 3 to the Tax Laws Amendment (2010 GST Administration Measures No. 2) Act 2010 (the Amendment Act), section 29-70 of the Act was substantially amended from 1 July 2010, making the requirements for tax invoices in regulations 29-70.01 and 29-70.02 of the Principal Regulations redundant for net amounts for tax periods starting on or after 1 July 2010.
The amending Regulations repealed regulations 29-70.01 and 29-70.02 of the Principal Regulations with effect from 1 July 2010, the date of application of the amendments to the Act.
Public consultation was undertaken on the design and drafting of the overall tax invoice amendments by the issue of a discussion paper, followed by the release of draft legislation for comment. No specific consultation was undertaken on these Regulations as they are minor and mechanical in nature.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commenced on 1 July 2010 and apply in relation to net amounts for tax periods starting on or after 1 July 2010.
The Regulations do not have retrospective effect in substance as the provisions in the Amendment Act impliedly repealed the redundant regulations in relation to net amounts for tax periods starting on or after 1 July 2010. The Regulations expressly repealed the redundant regulations in the same way. As the Regulations do not have retrospective effect in substance, they do not contravene subsection 12(2) of the Legislative Instruments Act 2003, which provides for a general rule that regulations may not have retrospective effect if they disadvantage a person’s rights or impose liability on a person. In any event, the Regulations do not operate to disadvantage or impose a liability on any person.
Overview
The A New Tax System (Goods and Services Tax) Amendment Regulations 2010 (No. 1) were enacted by the Parliament of Australia to amend the A New Tax System (Goods and Services Tax) Regulations 1999, reflecting changes introduced by the Tax Laws Amendment (2010 GST Administration Measures No. 2) Act 2010. The principal objective of these amendments is to streamline and modernise the regulatory framework governing tax invoices under the GST system, thereby addressing issues arising from outdated requirements and improving compliance efficiency. These Regulations were issued by authority of the Assistant Treasurer and commenced on 1 July 2010, aligning with the new legislative provisions that took effect from the same date. The changes were designed to eliminate unnecessary regulatory burdens while maintaining the integrity and functionality of the GST system, ensuring that tax invoices continue to serve their purpose effectively within the reformed legislative environment.
Scope and Application
The A New Tax System (Goods and Services Tax) Amendment Regulations 2010 (No. 1) apply to entities making taxable supplies and those seeking to claim input tax credits under the A New Tax System (Goods and Services Tax) Act 1999, effectively within the Commonwealth of Australia. These Regulations were introduced to align with amendments to the primary Act, which were passed by Parliament and received Royal Assent on 22 June 2010. They effectively repeal certain requirements for tax invoices that were previously specified in the A New Tax System (Goods and Services Tax) Regulations 1999, following the substantial amendment of section 29-70 of the primary Act by the Tax Laws Amendment (2010 GST Administration Measures No. 2) Act 2010. The Regulations commenced on 1 July 2010 and apply to net amounts for tax periods starting on or after this date. They do not have retrospective effect and are designed to streamline the requirements for tax invoices in light of the legislative changes, without disadvantaging any person or imposing additional liabilities.
Key Provisions
The New Tax System (Goods and Services Tax) Amendment Regulations 2010 (No. 1) (the amending Regulations) amend the A New Tax System (Goods and Services Tax) Regulations 1999 (the Principal Regulations) to remove certain requirements for documents to be tax invoices or recipient-created tax invoices. This is pursuant to section 177-15 of the A New Tax System (Goods and Services Tax) Act 1999 (the Act), which allows for regulations to be made to prescribe matters required or permitted by the Act, or necessary or convenient to carry out the Act. The changes in the amending Regulations reflect the substantial amendments to the Act made by the Tax Laws Amendment (2010 GST Administration Measures No. 2) Act 2010, which took effect from 1 July 2010.
Entities that make taxable supplies are generally required to issue a tax invoice to the recipient within 28 days of a request under section 29-70 of the Act. A tax invoice is a document that communicates the GST treatment of a supply to the recipient and is necessary for the recipient to claim an input tax credit under section 29-10 of the Act. The specific requirements for a tax invoice, including the information it must contain, are set out in section 29-70 of the Act and regulations 29-70.01 and 29-70.02 of the Principal Regulations. However, these latter regulations have been repealed by the amending Regulations, effective from 1 July 2010, as the requirements they contained have been rendered redundant by the changes to the Act.
Under the amending Regulations, entities governed by the Principal Regulations are now subject to the streamlined requirements for tax invoices as provided by the amended Act, with no specific mention of the previous detailed regulations. This means that the entities must still ensure that their tax invoices are adequate for the purposes of GST compliance but are no longer bound by the specific detailed requirements that have been repealed. It is important for these entities to understand the overarching requirements for tax invoices as per the Act, and to ensure that their tax invoices contain all necessary information for GST purposes.
There are no specific offences or penalties outlined in the amending Regulations themselves. However, entities that fail to comply with the requirements for tax invoices under the Act may face penalties. Under section 28-10 of the Act, a person who fails to comply with a requirement to issue a tax invoice may be liable to pay a penalty equal to the amount of GST that would have been payable on the supply if a tax invoice had been issued. Additionally, under section 28-20 of the Act, a person who makes a false or misleading statement in a tax invoice may be liable to a penalty of up to $2,220 for an individual and $11,100 for a body corporate, as well as imprisonment for up to two years. These penalties serve as a deterrent to non-compliance with the tax invoice requirements.