Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 24) 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 franchisee to issue Recipient Created Tax Invoices (RCTIs) to the franchisor if the franchisee 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 franchisee who is the recipient of a taxable supply may issue a tax invoice that belongs to a class of tax invoices for a taxable supply by a franchisor where:
- the recipient establishes the value of the supply rather than the supplier; 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 franchisee to issue RCTIs to the franchisor. The franchisee 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. 5) 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 The replaced instrument is repealed on the commencement of this determination.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. 24) 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 franchisee to issue Recipient Created Tax Invoices (RCTIs) to franchisor, if the franchisee 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. 24) 2015, enacted by the Australian Government, aims to address the practical difficulties faced by franchisees in the issuance of tax invoices under the A New Tax System (Goods and Services Tax) Act 1999. The determination is made by the Commissioner of Taxation under subsection 29-70(3) of the aforementioned Act, taking into account factors such as the type of industry, the nature of the taxable supply, the GST turnover of the recipient, and specific requirements for issuing RCTIs. The policy objective is to balance the facilitation of practical use of RCTIs by businesses with the need to maintain the integrity of the GST system. This instrument allows franchisees to issue RCTIs to their franchisors if the franchisee determines the value of the taxable supply, thereby streamlining invoicing and payment practices with minimal compliance costs.
Scope and Application
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 24) 2015 applies to franchisees and franchisors engaged in taxable supplies within the franchise industry. The instrument allows a franchisee to issue a Recipient Created Tax Invoice (RCTI) to the franchisor, provided the franchisee determines the value of the supply and meets specific criteria outlined in the determination. This legislation operates under the framework of the A New Tax System (Goods and Services Tax) Act 1999 and is a legislative instrument for the purposes of the Legislative Instruments Act 2003. It has a national jurisdictional reach, impacting businesses across Australia. The instrument is not retrospective and commences on the day after registration. There are no substantive changes from the previous instrument, hence it is considered minor or machinery in nature, and no further consultation was necessary. The determination ensures compliance with human rights as it does not engage any of the applicable rights or freedoms, facilitating streamlined invoicing and payment practices without raising human rights issues.
Key Provisions
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No. 24) 2015 (the Determination) under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999, enables a franchisee to issue a Recipient Created Tax Invoice (RCTI) to the franchisor if the franchisee determines the value of the taxable supply. The primary requirement is that the franchisee, as the recipient, must establish the value of the supply, rather than the franchisor. Additionally, the franchisee must adhere to the specific conditions outlined in Clause 6 of the Determination to ensure compliance with the RCTI process (section 7).
The Determination imposes specific obligations on the franchisee who issues the RCTI. These obligations include accurately determining the value of the taxable supply, ensuring that all necessary details are included in the invoice, and complying with any other conditions stipulated in Clause 6 of the instrument. This includes maintaining records that support the value determined and the compliance with the requirements of the Determination. The franchisee must also ensure that the RCTI is issued in accordance with the prescribed format and within the stipulated timeframe to maintain the integrity of the invoicing process (section 6).
Any failure to comply with the Determination could result in penalties, although the Determination itself does not explicitly outline specific offences or penalties. The A New Tax System (Goods and Services Tax) Act 1999, under which this Determination is made, provides for various penalties for non-compliance with GST laws, including fines and imprisonment for serious breaches. The penalties can vary significantly based on the nature and severity of the non-compliance, with maximum penalties including substantial fines and imprisonment terms for deliberate and repeated violations. The Determination ensures that the integrity of the GST system is preserved by allowing only those RCTIs that meet the specified conditions to be valid (sections 29-70, 29-75).