A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013

Administered by Department of the Treasury

Legislation au F2013L00534 Not in force Legislative Instrument

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Australian Taxation Office Legislative Instrument

Instrument ID: 2013/ITX/0005

 

 

A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013

 

Explanatory Statement

 

 

General outline of this instrument

  1.                This legislative instrument is made under subsection 29-10(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
  2.                This instrument waives the requirement for a recipient making a creditable acquisition to hold a tax invoice for an input tax credit to be attributable to a tax period, where the total price of the thing or things acquired cannot be ascertained at the time an invoice is issued or a payment is made when they hold a document that meets the requirements prescribed in this instrument.
  3.                This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
  4.                All legislative references in this explanatory statement are to provisions in the GST Act unless otherwise specified.

 

Commencement and application of this instrument

5.                  This instrument commences on 1 July 2010 and applies to net amounts for tax periods commencing on or after that date.

6.                  The retrospective application of this instrument does not have an adverse effect on the rights or liabilities of any person other than the Commonwealth.[1] The effect of this instrument is to the advantage of affected parties. It waives the requirement for a recipient to hold a tax invoice before an input tax credit is attributable to a tax period when the recipient holds a document that meets the requirements prescribed in this instrument.

7.                  These prescribed requirements are not substantively different to the requirements under which documents that showed an interim amount of consideration payable instead of the total price for the supply were treated as tax invoices in Goods and Services Tax Ruling GSTR 2000/17 – Goods and services tax: tax invoices (withdrawn on 25 May 2011). This means that suppliers or their agents do not have to change their software or accounting systems to issue documents that would comply with this instrument.

8.                  This instrument applies retrospectively to align to the date of effect of the legislative change for tax invoices.[2]

 

What is this instrument about?

9.                  The effect of this instrument is that an input tax credit for a creditable acquisition is attributable to a tax period for acquisitions where the total price of the supply is not known when the recipient or their agent holds a document other than a tax invoice. This instrument also sets out the particular information that must be included in this document for the input tax credit to be attributed to that tax period.

 

What is the effect of this instrument?

10.              This instrument waives the requirement for a recipient to hold a tax invoice before an input tax credit for a creditable acquisition is attributable to a tax period when the recipient or their agent holds a document that meets the requirements of this instrument.

11.              This instrument intends to give effect to the same general treatment as when the Commissioner had exercised the discretion GSTR 2000/17 to treat documents that show interim amounts of consideration payable rather than the total price of the supply as a tax invoice.

12.              Compliance cost impact: An assessment of the compliance cost impact indicates that the impact will be minimal for both the implementation and on-going compliance costs. The instrument is routine in nature.

 

Background

13.              Generally, when a recipient makes a creditable acquisition, an input tax credit for the acquisition is not attributable to a tax period until they hold a tax invoice. A tax invoice is a document that meets the requirements in subsection 29-70(1).

14.              In some cases, the necessity for the recipient to hold a document that meets the requirements of subsection 29-70(1) may impose a disproportionate burden on a supplier or a recipient, particularly if the document that they do hold has most of the required features of a tax invoice.

15.              GSTR 2000/17 outlined circumstances under which documents that show interim amounts of consideration payable rather than the total price were treated as tax invoices because the Commissioner exercised the discretion under former subsection 29-70(1). The Commissioner’s discretion to treat a document as a tax invoice is now contained in subsection 29-70(1B).

16.              The Commissioner’s discretion under subsection 29-70(1B) is administrative, and can only be exercised on a case by case basis. Therefore it is no longer appropriate to deal with this matter in a public ruling. Instead, the Commissioner is making a determination under subsection 29-10(3) to ensure that taxpayers do not have to change their administrative practices.

 

Explanation

17.              The A New Tax System (Goods and Services Tax) (Particular Attribution Rules Where Total Consideration Not Known) Determination (No. 1) 2000 legislative instrument sets out the particular attribution rules for supplies and acquisitions where some consideration is received (or provided), or an invoice is issued, before the total consideration for the supply or acquisition can be ascertained because it depends on a future event or events. The effect of the particular attribution rules is to defer attribution of the GST payable on the supply, or entitlement to an input tax credit, in respect of the amount that cannot be ascertained.

18.              The particular attribution rules also provide for an input tax credit for a creditable acquisition to be attributed to a tax period but only to the extent that the consideration is provided or an invoice is issued before the total consideration is known. When the recipient knows the total consideration, the input tax credit for the creditable acquisition is also attributable to that tax period, but only to the extent that the input tax credit has not been previously attributed to an earlier tax period.

19.              However, under subsection 29-10(3), an input tax credit is not attributable to a tax period unless the recipient holds a tax invoice. In these circumstances, a supplier cannot produce a document that meets the information requirements for a tax invoice under subsection 29‑70(1) before the total consideration is known as subparagraph 29‑70(1)(c)(iii) requires that the price of what is supplied be able to be clearly ascertained from the document. As a result, an input tax credit for the acquisition would not be attributable to a tax period in accordance with the particular attribution rules of that instrument.

20.              To give effect to those particular attribution rules, where the recipient holds an invoice or other document showing an interim amount of consideration payable or paid, and that invoice or other document otherwise satisfies the requirements of paragraphs 29‑70(1)(a) and 29-70(1)(c), this instrument has the effect of allowing an input tax credit for a creditable acquisition to be attributed at the time the recipient gives their GST return for the tax period to the Commissioner.

21.              When the total amount of the consideration is known, a supplier may issue a further document for the remainder of the consideration payable rather than the total price of the supply. Where the recipient holds such a document, and that document otherwise satisfies the requirements of paragraphs 29-70(1)(a) and 29-70(1)(c), this instrument has the effect of allowing the input tax credit for a creditable acquisition to be attributed at the time the recipient gives their GST return for the tax period to the Commissioner.

 

Consultation

22.              Section 18 of the Legislative Instruments Act 2003 specifically provides for circumstances where consultation may not be necessary or appropriate. One of those circumstances is where the instrument is considered minor or machinery in nature, and does not substantially change the law.

23.              Although the instrument was considered minor or machinery in nature, and does not substantially change the law, comment was invited from members of the community through the publication of a consultation draft of this instrument and explanatory statement.

 

James O’Halloran
Deputy Commissioner of Taxation

19 March 2013

 

Related Rulings / Determinations

GSTR 2000/17 (Withdrawn)

 

Legislative references

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

29-10(3)

29-70(1)

29-70(1)(a)

29-70(1)(c)(iii)

29-70(1B)

 

Legislative Instruments Act 2003

12(2)

18

 

Human Rights (Parliamentary Scrutiny) Act 2011

Part 3

3

 

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

29-70.01

29-70.02

 

Other references

A New Tax System (Goods and Services Tax) (Particular Attribution Rules Where Total Consideration Not Known) Determination (No. 1) 2000

 

Subject references

Goods and services tax

Attribution rules

Creditable acquisition

GST input tax credits & creditable acquisitions

Taxable supply

Tax invoices

 

Tax Office references

 

NO:

 

ISSN:

 

 


Statement of Compatibility with Human Rights

 

This Statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013

 

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

 

This instrument waives the requirement for a recipient making a creditable acquisition, where the total price of the thing or things acquired cannot be ascertained at the time an invoice is issued or a payment is made, to hold a tax invoice for an input tax credit to be attributable to a tax period.

 

Human Rights Implications

 

On an assessment of the compatibility of this instrument with the seven core international human rights treaties to which Australia is a party, it has been determined that this instrument does not engage any of the applicable rights or freedoms because the instrument is minor or machinery in nature.

 

Conclusion

 

This legislative instrument is compatible with human rights as it does not raise any human rights issues.

 

 

 

James O’Halloran
Deputy Commissioner of Taxation

 

[1] Subsection 12(2) of the Legislative Instruments Act 2003 provides that a retrospective legislative instrument (or provision of that instrument) will be of no effect if it applies to adversely affect the rights or liabilities of any person other than the Commonwealth or an authority of the Commonwealth.

[2] See Tax Laws Amendment (2010 GST Administration Measure No.2) Act 2010 and the repeal of regulations 29.70.01 and 29.70.02 to the A New Tax System (Goods and Services Tax) Regulations 1999 by the A New Tax System (Goods and Services Tax) Amendment Regulations 2010 (No.1) (206 of 2010).

Overview

The A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013 was enacted to address the issue of input tax credits for creditable acquisitions where the total consideration for the supply is not known at the time the invoice is issued or payment is made. The instrument was introduced to alleviate the burden on suppliers and recipients when it is impractical to ascertain the total price at the time of invoicing. This legislative instrument was enacted by the Australian Government and aims to provide clarity and flexibility in the application of the tax invoice requirement under the A New Tax System (Goods and Services Tax) Act 1999. The policy objective of this instrument is to streamline administrative practices and ensure that taxpayers are not unduly burdened when dealing with creditable acquisitions where the total price cannot be determined upfront. It aligns with the previous treatment outlined in Goods and Services Tax Ruling GSTR 2000/17, ensuring consistency in the application of the law without imposing significant changes on taxpayers.

Scope and Application

This legislative instrument, the A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013, applies to creditable acquisitions where the total consideration cannot be determined at the time an invoice is issued or a payment is made. It allows a recipient to attribute an input tax credit to a tax period if they hold a document meeting the requirements prescribed in the instrument, rather than requiring a tax invoice. The instrument applies to net amounts for tax periods commencing on or after 1 July 2010, and its retrospective application does not adversely affect the rights or liabilities of any person other than the Commonwealth. The instrument aims to waive the tax invoice requirement under the A New Tax System (Goods and Services Tax) Act 1999 for creditable acquisitions where the total price of the supply is unknown when the recipient holds a document other than a tax invoice. This waiver aligns with the treatment of documents that show interim amounts of consideration payable rather than the total price for the supply, as outlined in Goods and Services Tax Ruling GSTR 2000/17. The instrument is considered minor or machinery in nature and does not substantially change the law, thus consultation was not deemed necessary or appropriate. The instrument is compatible with human rights as it does not raise any human rights issues.

Key Provisions

The A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013, under subsection 29-10(3) of the A New Tax System (Goods and Services Tax) Act 1999, waives the requirement for a recipient to hold a tax invoice in order for an input tax credit to be attributable to a tax period if the total price of the acquired goods or services cannot be ascertained at the time an invoice is issued or a payment is made. This waiver applies when the recipient holds a document that meets the prescribed requirements. These requirements are similar to those under which documents showing interim amounts of consideration payable were treated as tax invoices in Goods and Services Tax Ruling GSTR 2000/17 (withdrawn on 25 May 2011). This ensures suppliers do not need to change their software or accounting systems. The Act imposes on recipients the obligation to hold a document that satisfies the prescribed requirements if the total price of the acquisition cannot be ascertained at the time of invoicing or payment. These requirements include having a unique identification number, the supplier's name and address, the date of supply, a description of the goods or services, and an amount for the consideration. The Act further requires that the recipient must provide a GST return for the tax period to the Commissioner at the time the input tax credit can be attributed. This waiver does not affect the rights or liabilities of any person other than the Commonwealth and does not have an adverse effect on anyone else. Under the Act, there are no specific offences or penalties for breaching the requirements of this instrument. However, if a recipient improperly claims an input tax credit without meeting the prescribed requirements, they may be subject to the general provisions of the GST Act. These provisions include civil and criminal penalties for providing false or misleading statements, which can result in fines and imprisonment. The severity of the penalties depends on the extent of the false or misleading conduct. Additionally, the Commissioner may recover any GST or input tax credit that has been incorrectly claimed. In summary, the A New Tax System (Goods and Services Tax) Waiver of Tax Invoice Requirement (Acquisitions Where Total Consideration Not Known) Legislative Instrument 2013 provides a waiver for the tax invoice requirement under certain circumstances, imposes specific obligations on recipients, and subjects them to potential civil and criminal penalties if they fail to comply with the prescribed requirements.

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