Goods and Services Tax: Choosing to Account on a Cash Basis Determination (No 39) 2015 - representatives of incapacitated entities

Goods and Services Tax: Choosing to Account on a Cash Basis Determination (No 39) 2015 - representatives of incapacitated entities.

Explanatory Statement

General Outline of Instrument

1. This determination is made under paragraph 29-40(1)(c) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
2. It allows all representatives of incapacitated entities to account on a cash basis where the incapacitated entities had previously carried on an enterprise.
3. The determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Date of effect

4.      The determination commences on the day after registration.

5.      The determination does not apply retrospectively.

What is this instrument about

6.      The purpose of this determination is to identify a specific type of enterprise that is entitled to choose to account on a cash basis.

7.      Representatives of incapacitated entities may want to choose a cash basis of accounting for commercial or regulatory reasons eg Insolvency Practitioners having to account on a cash basis to the Australian Securities and Investment Commission (ASIC) or reporting to creditors pursuant to the Bankruptcy Act.

8.      Representatives of incapacitated entities not qualifying for status under either paragraphs 29-40(1)(a), (ab) or (b) of the GST Act and being able to account for GST on a cash basis may apply for a determination to do so under paragraph 29-40(1)(c) of the GST Act.

9.      This legislative instrument determines that paragraph 29-40(1)(c) of the GST Act applies to all representatives of incapacitated entities without their need to seek a determination.

What is the effect of this instrument

10.  The effect of this determination is to alleviate the necessity for representatives of incapacitated entities to seek a determination that they are entitled to choose to account for GST on a cash basis. It allows these representatives to account on a cash basis of accounting irrespective of the method of accounting originally adopted by the entity prior to incapacitation.

11.  Compliance cost impact: minor- there will be no or minimal impacts for both implementation and ongoing compliance costs. The legislative instrument is minor or machinery in nature. 

Background

12.  This determination replaces the Goods and Services Tax: Choosing to Account on a Cash Basis Determination (No 1) 2000 - representatives of incapacitated entities. The replaced instrument is repealed on the commencement of this determination.

Consultation:

13.  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.

14.  There is no substantive change from the previous instrument therefore the instrument is considered minor or machinery in nature.

15.  As such, no further consultation has been undertaken in the development of this instrument.

Legislative references:

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

Acts Interpretation Act 1901

Legislative Instruments Act 2003

Human Rights (Parliamentary Scrutiny) Act 2011

Statement of Compatibility with Human Rights

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

Goods and Services Tax: Choosing to Account on a Cash Basis Determination (No 39) 2015 - representatives of incapacitated entities.

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

This Legislative Instrument provides that an enterprise previously carried on by an incapacitated entity is an enterprise of a kind in respect of which a representative of that incapacitated entity may choose to account for GST on a cash basis. It therefore alleviates the necessity for representatives of incapacitated entities to seek a determination that they are entitled to choose to account for GST on a cash basis.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms as it is considered to be minor or machinery in nature and does not substantially change the law.

Conclusion

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