Explanatory Statement
Goods and Services Tax: (Particular Attribution Rules for Cooling off Periods) Determination 2017
General outline of determination
- The determination is made under subsection 29-25(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
- Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws) the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
- The determination specifies particular attribution rules for GST payable and input tax credits on taxable supplies or creditable acquisitions where a statutory cooling off period under an Australian law applies.
- The determination is a legislative instrument for the purposes of the Legislation Act 2003.
Date of effect
5. The determination commences on the day after its registration on the Federal Register of Legislation.
What is the determination about?
6. Sections 29-5 and 29-10 of the GST Act set out the rules for attributing GST and input tax credits on your taxable supplies and creditable acquisitions.
7. The determination provides rules for attribution of GST and input tax credits where you make a taxable supply or creditable acquisition that is subject to a statutory cooling off period under an Australian law.
What is the effect of the determination?
8. Where you make a taxable supply that is subject to a statutory cooling off period under an Australian law and the GST payable on that supply is attributable under section 29-5 of the GST Act to a tax period that ends before the statutory cooling off period expires, then the GST payable is attributable to the tax period in which the cooling off period expires.
9. Where you make a creditable acquisition that is subject to a statutory cooling off period under an Australian law and the input tax credit on that acquisition is attributable under section 29-10 of the GST Act to a tax period that ends before the statutory cooling off period expires, then the input tax credit is attributable to the tax period in which the cooling off period expires.
10. Compliance cost impact: Minor – there will be no or minimal impact for both implementation and ongoing compliance costs. The determination is minor or machinery in nature
Background
11. The determination replaces A New Tax System (Goods and Services Tax) (Particular Attribution Rules for Cooling off Periods) Determination (No. 1) 2000 - F2006B11605, registered on 20 November 2006 (the previous determination). The previous determination is repealed on commencement of the determination.
12. The determination is substantially the same as the previous determination that it replaces. An entity that satisfied the requirements of the previous determination will satisfy the requirements of this termination.
Consultation:
13. Subsection 17(1) of the Legislation Act 2003 requires, before the making of a determination, that the rule-maker is satisfied that appropriate and reasonably practicable consultation has been undertaken.
14. Broad consultation has been undertaken. The draft determination and draft explanatory statement were published on the ATO Legal database at ato.gov.au seeking feedback and comments for a period of two weeks. Notice of the draft determination was also published to ato.gov.au and subscription alerts issued. Tax professionals and tax associations regularly review both the Legal database and ato.gov.au and further promulgate advice of new drafts issued in their internal news bulletins. The major legal publishers also publish news of the drafts in their key tax alerting services - such as the Weekly Tax Bulletin (published by Thomson Reuters Australia) and Tax Tracker and Tax Week (published by CCH Australia). Additionally, draft determinations and draft explanatory statements have been published on the ATO Consultation Hub. Links to these drafts were published organisations and newsletters such as the Taxation News (Chartered Accountants Australia and New Zealand) weekly bulletin. No comments have been received to date.
Legislative references:
A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
Acts Interpretation Act 1901
Legislation Act 2003
Human Rights (Parliamentary Scrutiny) Act 2011
Statement of Compatibility with Human Rights
This Legislative Instrument is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Goods and Services Tax: (Particular Attribution Rules for Cooling off Periods) Determination 2017
The 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
The attribution of the GST and Input Tax Credits (ITC) depends on rules which may cause an unintended compliance burden in a circumstance where your supply, or acquisition, is subject to a statutory cooling off period. This determination clarifies when GST or ITC is attributable to a tax period.
Human rights implications
The determination does not engage any of the applicable rights or freedoms. It applies to a deferral of GST or ITC by attributing it to a tax period in which the cooling off period expires.
Conclusion
The Instrument is compatible with human rights as it does not raise any human rights issues.
Overview
The Goods and Services Tax: (Particular Attribution Rules for Cooling off Periods) Determination 2017 was enacted to provide clarity on the attribution of GST and input tax credits for taxable supplies or creditable acquisitions that are subject to a statutory cooling off period under Australian law. This legislation, made under the authority of the A New Tax System (Goods and Services Tax) Act 1999, aims to address the issue of unintended compliance burdens that may arise when supplies or acquisitions are subject to such cooling off periods. The determination outlines the specific rules for attributing GST and ITC, ensuring that where a taxable supply or creditable acquisition is subject to a statutory cooling off period, the GST payable or input tax credit is attributed to the tax period in which the cooling off period expires. This legislative instrument was introduced by the Australian Parliament and is designed to be minor or machinery in nature, with minimal impact on compliance costs. Broad consultation was undertaken before the determination was made, including publishing draft versions on the ATO Legal database and various professional tax publications, although no comments were received.
Scope and Application
The Goods and Services Tax: (Particular Attribution Rules for Cooling off Periods) Determination 2017 applies to entities making taxable supplies or creditable acquisitions that are subject to statutory cooling off periods under Australian law. This legislation seeks to clarify the rules for attributing GST and input tax credits in cases where the statutory cooling off period extends beyond the tax period in which the supply or acquisition was initially made. The Determination operates under the authority conferred by the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and applies across the Commonwealth of Australia. The Determination is designed to address potential unintended compliance burdens by specifying that the GST payable and input tax credits are to be attributed to the tax period in which the cooling off period expires, rather than the period in which the supply or acquisition was initially made. This legislative instrument is minor in nature and does not impose significant compliance costs, as it largely replaces and maintains the substance of previous legislation, namely the A New Tax System (Goods and Services Tax) (Particular Attribution Rules for Cooling off Periods) Determination (No. 1) 2000. The Determination is compatible with human rights as it does not engage any of the applicable rights or freedoms and merely defers the attribution of GST or ITC to a later tax period.
Key Provisions
The Goods and Services Tax: (Particular Attribution Rules for Cooling off Periods) Determination 2017 (the determination) under section 29-25(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) aims to provide clarity on the attribution of GST and input tax credits (ITC) in cases where a statutory cooling off period applies. Specifically, section 29-5 of the GST Act deals with the attribution of GST on taxable supplies, while section 29-10 addresses the attribution of ITC on creditable acquisitions. The determination stipulates that if a taxable supply subject to a statutory cooling off period is made, the GST payable is to be attributed to the tax period in which the cooling off period expires, rather than the earlier period to which it might otherwise be attributed. Similarly, if a creditable acquisition subject to a statutory cooling off period is made, the ITC is to be attributed to the tax period in which the cooling off period expires.
The determination imposes obligations on entities making taxable supplies or creditable acquisitions subject to statutory cooling off periods. It requires these entities to ensure that the GST payable and ITC are attributed to the correct tax period, which is the one in which the cooling off period ends. This involves a straightforward adjustment to the attribution period as specified in the determination, ensuring compliance with the rules for GST and ITC attribution. The compliance cost impact is expected to be minor, as the determination is largely procedural and does not introduce new substantive obligations beyond those already existing under the GST Act.
There are no specific offences or penalties outlined in the determination for failing to comply with its provisions. However, non-compliance with the GST Act generally can result in civil or criminal penalties. Under the GST Act, the Commissioner of Taxation may issue a notice of proposed adjustment, and failure to respond can lead to the assessment of additional tax, penalties, and interest. In more serious cases, the GST Act provides for criminal offences that can result in substantial fines and imprisonment. The determination itself does not create new offences but clarifies existing rules to prevent unintended compliance burdens.
The determination is compatible with human rights, as stated in the Statement of Compatibility with Human Rights, prepared under the Human Rights (Parliamentary Scrutiny) Act 2011. The determination does not engage any of the applicable rights or freedoms as it merely defers the attribution of GST or ITC to the tax period in which the cooling off period expires. This clarification does not infringe upon any human rights or freedoms recognised or declared in the international instruments listed in the Human Rights (Parliamentary Scrutiny) Act 2011. The legislative process included appropriate consultation with relevant stakeholders, and no comments were received on the draft determination.