Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No.27) 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 seller of reconditioned motor vehicle parts who is a recipient of a taxable supply by way of the return of a worn part 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 seller of reconditioned motor vehicle parts who is a recipient of a taxable supply by way of the return of a worn part, may issue a tax invoice that belongs to a class of tax invoices for a taxable supply of a worn part where the following circumstances exist:
- the recipient of the worn part is registered for GST;
- the recipient sells a reconditioned part to a customer;
- the recipient of the worn part issues an invoice for the sale of the reconditioned part to a customer that separately itemises a deposit (generally referred to as a ‘core deposit’) for the supply of the worn part;
- the customer later supplies a worn part to the recipient who pays the ‘core deposit’ to the customer;
- if the customer does not supply the worn part, the ‘core deposit’ is retained by the supplier of the reconditioned part;
- the recipient establishes the value of worn parts; 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 seller of reconditioned motor vehicle parts to issue RCTIs to the supplier. The recipient of the taxable supply 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) Act 1999 Classes of Recipient Created Tax Invoice Determination RCTI 2005/1. 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. 27) 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 seller of reconditioned motor vehicle parts who is a recipient of a taxable supply by way of the return of a worn part, may issue a tax invoice that belongs to a class of tax invoices for a taxable supply of a worn part where 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.27) 2015 was enacted to address the need for streamlined invoicing practices in the industry of reconditioned motor vehicle parts. This legislative instrument, made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999, was introduced by the Australian Government and aims to balance facilitating practical use of Recipient Created Tax Invoices (RCTIs) by businesses while maintaining the integrity of the GST system. This determination permits sellers of reconditioned motor vehicle parts to issue RCTIs to suppliers if certain conditions are met, including that the recipient is registered for GST, the recipient sells a reconditioned part to a customer, and the recipient separately itemises a deposit for the supply of the worn part in the invoice. The policy objective is to allow recipients to accurately calculate the value of the taxable supply and streamline their invoicing and payment practices, with minor compliance cost impacts.
Scope and Application
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No.27) 2015 applies to sellers of reconditioned motor vehicle parts who are recipients of a taxable supply by way of the return of a worn part. This determination, made under the A New Tax System (Goods and Services Tax) Act 1999, allows these sellers to issue Recipient Created Tax Invoices (RCTIs) to the supplier if they determine the value of the taxable supply. The determination is designed to balance the practical use of RCTIs by businesses and the integrity of the GST system, taking into account factors such as the industry type and GST turnover of the recipient. It applies to specific circumstances where the recipient is registered for GST, sells a reconditioned part, and separately items the core deposit for the supply of the worn part in their invoice. The instrument does not apply retrospectively and is intended to streamline the invoicing and payment practices of businesses involved in the sale of reconditioned motor vehicle parts. It is a legislative instrument under the Legislative Instruments Act 2003, and as it is considered minor or machinery in nature, no consultation was undertaken.
Key Provisions
The Goods and Services Tax: Classes of Recipient Created Tax Invoice Determination (No.27) 2015, under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999, provides specific guidelines for issuing Recipient Created Tax Invoices (RCTIs) by sellers of reconditioned motor vehicle parts. Section 27 of the determination allows these sellers to issue RCTIs if they receive a worn part as a taxable supply, and they establish the value of this supply. This provision is particularly relevant for businesses in the reconditioned motor vehicle parts industry who return worn parts to suppliers, provided they meet specific criteria such as registering for GST and issuing separate invoices for the core deposit of the worn parts.
The determination sets out several obligations for the entities it governs. For instance, sellers must ensure that they are registered for GST and must issue separate invoices that itemize the deposit for the worn parts. They must also establish the value of the worn parts accurately and satisfy the requirements set out in Clause 6 of the legislative instrument. This includes ensuring that any core deposit is either paid to the supplier when the worn part is returned or retained if it is not. By adhering to these obligations, businesses can streamline their invoicing and payment practices, which is a significant benefit given the practical nature of their operations.
In terms of compliance and enforcement, the Act does not explicitly detail specific offences, penalties, or consequences for breaches within the determination itself. However, general provisions under the A New Tax System (Goods and Services Tax) Act 1999 apply, and penalties for non-compliance with GST regulations can be severe. These may include fines and, in more serious cases, criminal charges. The exact penalties depend on the nature and extent of the breach, but they can be substantial, reflecting the importance of compliance within the GST framework. Given that this determination is minor or machinery in nature, it is likely that penalties would align with those typically associated with minor administrative non-compliance rather than deliberate evasion.
The determination's approach to human rights is straightforward, asserting compatibility with the rights and freedoms recognized in international instruments. The instrument does not engage any applicable rights or freedoms, as it primarily aims to streamline business processes without infringing on individual rights. This is evident in the conclusion that the instrument is compatible with human rights, as it does not raise any human rights issues. The streamlined invoicing practices it allows are purely administrative and do not impact personal freedoms or rights.