Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No.21) 2015
Explanatory Statement
General Outline of Instrument
- This determination is made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999.
- The determination allows a recipient of a taxable supply of mineral extraction to issue Recipient Created Tax Invoices (RCTIs) to the supplier if the recipient determines the value of the taxable supply.
- The determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Date of effect
4. The instrument commences on the day after registration.
5. The instrument does not apply retrospectively.
What is this instrument about:
6. The purpose of this instrument is to outline a class of tax invoices that the Commissioner has determined may be issued by recipients of taxable supplies. The Commissioner makes the determination by taking account of a number of factors including the type of industry, the taxable supply, GST turnover of the recipient and certain requirements for issuing RCTIs. The factors reflect a balance between facilitating the practical use of RCTIs by businesses and maintaining the integrity of the GST system.
7. A tax invoice that belongs to a class of tax invoices for a taxable supply of mineral extraction may be issued by an entity that is the recipient of that taxable supply where:
- the recipient establishes the value of those minerals after the supply is made using a qualitative or quantitative process; and
- the recipient satisfies the requirements set out in Clause 5 of the legislative instrument.
What is the effect of this instrument:
8. The effect of this instrument is to allow a recipient of a taxable supply of mineral extraction to issue RCTIs to the supplier for the taxable supply. The recipient has the expertise, knowledge and access to the relevant information to accurately calculate the value of the taxable supply. This instrument allows them to streamline their current invoicing and payment practices.
9. 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:
10. This instrument replaces A New Tax System (Goods and Services Tax) 1999 Classes of Recipient Created Tax Invoice Determination (No. 36) 2000. The replaced instrument is repealed on the commencement of this determination.
Consultation:
11. 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.
12. Because there is no substantive change from the previous instrument therefore the instrument is considered minor or machinery in nature.
13. As such, no further consultation has been undertaken in the development of this instrument.
James O’Halloran
Deputy Commissioner of Taxation
15 September 2015
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: Classes of Recipient Created Tax Invoice Determination (No. 21) 2015
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 allows a recipient of a taxable supply of mineral extraction to issue Recipient Created Tax Invoices (RCTIs) to the supplier, if the recipient determines the value of the taxable supply, and the requirements of the legislative instrument are satisfied.
Human rights implications
This instrument does not engage any of the applicable rights or freedoms. It allows for the streamlining of current invoicing and payment practices.
Conclusion
This instrument is compatible with human rights as it does not raise any human rights issues.
Overview
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 21) 2015 was enacted to address the need for flexibility in invoicing practices for the mineral extraction industry, particularly concerning the issuance of Recipient Created Tax Invoices (RCTIs). This legislative instrument was developed under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999, with the objective of balancing the practical needs of businesses with the integrity of the GST system. The instrument permits recipients of taxable supplies in the mineral extraction industry to issue RCTIs to suppliers if the recipient determines the value of the minerals after the supply is made. This change allows recipients to streamline their invoicing and payment processes, while ensuring compliance with GST regulations. The instrument does not apply retrospectively and is considered minor in nature, hence no further consultation was deemed necessary. It is compatible with human rights as it does not engage any of the applicable rights or freedoms.
Scope and Application
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 21) 2015 applies to entities that are recipients of a taxable supply of mineral extraction. The instrument allows these entities to issue Recipient Created Tax Invoices (RCTIs) to their suppliers, provided that the recipient has determined the value of the supply using a qualitative or quantitative process and meets certain specified requirements. This legislation facilitates more streamlined invoicing and payment practices for businesses within the mineral extraction industry, while also ensuring the integrity of the GST system is maintained. The instrument has a Commonwealth reach, as it is made under the A New Tax System (Goods and Services Tax) Act 1999 and operates in conjunction with the Legislative Instruments Act 2003. The instrument does not apply retrospectively and replaces a previous instrument (No. 36) that is repealed upon the commencement of this determination. The legislative instrument is considered minor or machinery in nature, with minimal compliance costs, and does not substantially change the law, hence consultation was not deemed necessary. The instrument is compatible with human rights, as it does not engage any of the applicable rights or freedoms.
Key Provisions
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No.21) 2015 primarily concerns the issuance of tax invoices by recipients of taxable supplies in the mineral extraction industry (sections 7 and 8). Under this legislative instrument, a recipient of a taxable supply of mineral extraction can issue a Recipient Created Tax Invoice (RCTI) to the supplier if certain conditions are met. These conditions include the recipient establishing the value of the minerals after the supply has been made, either qualitatively or quantitatively, and satisfying the requirements outlined in Clause 5 of the instrument (section 7).
The Act imposes specific obligations on the entities involved in these transactions. Recipients must ensure that the value of the taxable supply is accurately determined through a qualitative or quantitative process, and they must adhere to the requirements specified in Clause 5 of the instrument (section 7). This includes maintaining records and documentation that substantiate the value of the supply, which may be subject to review by the Commissioner. Failure to comply with these obligations can result in the RCTI not being recognised for GST purposes, potentially leading to disputes and additional compliance burdens.
While the instrument itself does not explicitly outline penalties for non-compliance, breaches of the conditions for issuing RCTIs could lead to the RCTI not being accepted by the supplier for GST purposes. This may result in disputes between the parties, with potential implications for tax assessments and audits. Although the legislative instrument is considered minor and does not introduce new offences, non-compliance could lead to investigations by the Australian Taxation Office, which might result in penalties for the recipient if the RCTIs are found to be non-compliant. The potential penalties could include fines and interest on any GST underpaid as a result of non-compliant invoicing practices.