Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No.22) 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 lessee to issue Recipient Created Tax Invoices (RCTIs) to the lessor if the lessee 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 renting may be issued by the recipient of that taxable supply where:
- the recipient establishes the value of that supply after the supply is made using a sales based calculation process; and
- the recipient satisfies the requirements set out in Clause 6 of the legislative instrument.
What is the effect of this instrument:
8. The effect of this instrument is to allow a recipient to issue RCTIs to the supplier that makes taxable supplies of renting. 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. 37) 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 The replaced instrument is repealed on the commencement of this determination.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. 22) 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 lessee that is the recipient of renting to issue Recipient Created Tax Invoices (RCTIs) to the lessor, if the lessee 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.22) 2015 was enacted to address the issue of streamlining invoicing and payment practices for businesses involved in the renting sector. This legislative instrument was introduced under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 by the Australian Government and aims to strike a balance between facilitating the use of Recipient Created Tax Invoices (RCTIs) by businesses and ensuring the integrity of the GST system. The determination allows lessees to issue RCTIs to lessors if they determine the value of the taxable supply, thereby streamlining their current invoicing and payment practices with minimal compliance costs. The instrument, deemed minor or machinery in nature, does not require additional consultation and replaces the previous A New Tax System (Goods and Services Tax) 1999 Classes of Recipient Created Tax Invoice Determination (No. 37) 2000.
Scope and Application
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 22) 2015 applies to lessees who are recipients of taxable supplies of renting. This legislative instrument, made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999, allows a lessee to issue Recipient Created Tax Invoices (RCTIs) to the lessor if the lessee determines the value of the taxable supply. The instrument reflects a balance between facilitating practical use of RCTIs by businesses and maintaining the integrity of the GST system. The determination does not apply retrospectively and commences on the day after registration. The instrument is considered minor or machinery in nature, and because it does not substantially change the law, it does not require further consultation. The instrument replaces the previous Classes of Recipient Created Tax Invoice Determination (No. 37) 2000 and is compatible with human rights as it does not engage any of the applicable rights or freedoms.
Key Provisions
The main sections of the Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 22) 2015 (the Determination) are Sections 6 and 7. Section 6 outlines the specific circumstances under which a recipient can issue a Recipient Created Tax Invoice (RCTI) to the supplier of a taxable supply of renting. This includes the requirement that the recipient must establish the value of the supply using a sales-based calculation process after the supply is made (Section 6). Section 7 then specifies the conditions under which a tax invoice that belongs to this class of RCTIs can be issued by the recipient of the taxable supply, namely, when the recipient determines the value of the supply and satisfies the requirements set out in Clause 6 of the Determination (Section 7).
The Determination imposes obligations on the parties involved, particularly the lessees who are recipients of taxable supplies of renting. A lessee must determine the value of the taxable supply using a sales-based calculation process and ensure that the RCTI issued to the lessor meets all the criteria specified in Clause 6. This includes ensuring the RCTI contains all the necessary information, such as the date of supply, description of goods or services, value of the supply, GST amount, and the recipient's ABN. Failure to comply with these requirements could result in the RCTI not being accepted by the supplier, potentially causing delays in payment or disputes over the correct amount of GST.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the Determination itself. However, under the A New Tax System (Goods and Services Tax) Act 1999, there are broader provisions that apply. For instance, if a lessee fails to issue an accurate RCTI, this could be considered a failure to provide a tax invoice, which could result in penalties under the GST Act. The penalties for providing a false or misleading document can be significant, including fines of up to $21,000 for individuals and up to $105,000 for corporations, as well as potential criminal charges. Therefore, it is crucial for lessees to ensure compliance with the Determination to avoid these potential repercussions.