Explanatory Statement
Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 08) 2016 for Commission Based Services provided to a member of the Stockbrokers Association of Australia
General outline of determination
- This determination is made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
- The determination allows a principal broker that is a recipient of a taxable supply of commission based services to issue recipient created tax invoices (RCTIs) to the suppliers if the principal broker determines the value of the taxable supply as set out in the determination.
- The determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Date of effect
4. The determination commences on the day after registration.
What is this determination about:
5. Generally, tax invoices are issued by the entity that makes the supply under the GST Act.
6. The purpose of this determination is to outline a class of tax invoices that the Commissioner has determined may be issued by recipients of taxable supplies (called RCTIs). The Commissioner makes the determination by taking account a number of factors including the type of industry, the taxable supply, the 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. In accordance with this determination, a principal broker who is a recipient to a taxable supply of commission based services may issue a RCTI for the supply if the recipient:
- establishes the value of the taxable supply after the supply is made; and
- satisfies the requirements set out in Clause 7 of the determination.
What is the effect of this determination
8. The effect of this determination is to allow a principal broker that is a recipient of a taxable supply of commission based services, to issue a RCTI to the supplier provided the requirements of the determination are satisfied. As the recipient has the information to establish the value of the supply, issuing RCTIs for such supplies will simplify payment and invoicing processes.
9. This determination is substantially the same as the previous determination that it replaces, however, it reflects the fact that the Securities and Derivatives Industry Association has been renamed to the Stockbrokers Association of Australia. Therefore, a principal broker who satisfied the previous determination will satisfy this determination and can continue to issue RCTIs under this determination.
10. Compliance cost impact: minor- there will be no or minimal impacts for both implementation and ongoing compliance costs. The determination is minor or machinery in nature.
Background
11. This determination replaces A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 10) 2000.The instrument is repealed on the commencement of this determination.
Consultation:
12. Consultation has been undertaken with the Stockbrokers Association of Australia to ensure the relevancy and accuracy of the determination.
Legislative references:
A New Tax System (Goods and Services Tax) Act 1999
Legislative Instruments Act 2003
Timothy Dyce
Deputy Commissioner of Taxation
[24 February 2016]
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: Recipient Created Tax Invoice
Determination (No. 08) 2016 for Commission Based Services provided to a member of the Stockbrokers Association of Australia
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
Generally, tax invoices are issued by a supplier under the basic rules for GST. This Legislative Instrument allows a principal broker that is the recipient of a taxable supply of commission based services to issue the tax invoice (called recipient created tax invoice) to the supplier, if the recipient determines the value of the taxable supply in the manner set out under the Legislative Instrument and all other requirements of the Instrument are satisfied. This will simplify invoicing and payment processes for both the principal broker and supplier.
Human rights implications
This Instrument does not engage any of the applicable rights or freedoms. It allows for the streamlining of 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: Recipient Created Tax Invoice Determination (No. 08) 2016 was enacted to address the need for streamlined invoicing and payment processes within the financial services industry, particularly for commission-based services provided to members of the Stockbrokers Association of Australia. This legislative instrument was developed under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and is intended to offer flexibility in the issuance of tax invoices while maintaining the integrity of the GST system. The determination was issued by the Australian government and is designed to balance practical use of recipient created tax invoices (RCTIs) by businesses with the need to ensure compliance with the GST framework. This legislative instrument aims to simplify the invoicing process by allowing a principal broker, who is the recipient of a taxable supply of commission-based services, to issue an RCTI to the supplier provided the broker meets the specific conditions outlined in the determination, including establishing the value of the supply after the supply is made. The determination is compatible with human rights as it does not raise any human rights issues and is designed to streamline processes without impacting on individual rights or freedoms.
Scope and Application
The Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 08) 2016 applies to principal brokers who are recipients of taxable supplies of commission-based services provided to members of the Stockbrokers Association of Australia. This determination, made under the A New Tax System (Goods and Services Tax) Act 1999, allows these principal brokers to issue recipient created tax invoices (RCTIs) to their suppliers, provided they establish the value of the taxable supply and meet the specified requirements. This facilitates simplified invoicing and payment processes. The scope of this determination is national, operating under the Commonwealth framework but directly affecting entities within the stockbroking industry. The determination does not impose any significant compliance costs and is designed to maintain the integrity of the GST system while easing administrative burdens. This legislative instrument replaces an earlier determination, reflecting the renaming of the Securities and Derivatives Industry Association to the Stockbrokers Association of Australia, and is compatible with human rights as it does not engage any applicable rights or freedoms.
Key Provisions
The Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 08) 2016 (the Determination) outlines specific circumstances under which a principal broker who is a recipient of a taxable supply of commission-based services can issue a recipient created tax invoice (RCTI) to the supplier. According to section 7 of the Determination, a principal broker can issue an RCTI if they establish the value of the taxable supply after the supply is made and satisfy all the requirements stipulated in Clause 7 of the Determination. This provision aims to streamline the invoicing and payment processes between the broker and the supplier, simplifying the overall transaction.
Under the Determination, the principal broker, who is a member of the Stockbrokers Association of Australia, has the obligation to accurately determine the value of the taxable supply in accordance with the specified guidelines. This includes ensuring that all criteria set out in Clause 7 of the Determination are met. These requirements are designed to maintain the integrity of the Goods and Services Tax (GST) system while facilitating the practical use of RCTIs by businesses.
Breach of the requirements set out in the Determination can lead to various consequences. Although specific offences and penalties are not detailed in the Determination, non-compliance with GST regulations generally can result in civil or criminal penalties. For civil penalties, the GST Act provides for penalties up to 25% of the GST owed, and in some cases, higher penalties may apply. Criminal penalties may include fines and imprisonment for serious or repeated breaches. The exact penalties will depend on the nature and extent of the non-compliance.
The Determination is compatible with human rights as it does not engage any of the applicable rights or freedoms. It primarily facilitates the streamlining of invoicing and payment practices, which does not infringe upon any human rights. The Determination reflects a minor legislative change, primarily updating the name of the Securities and Derivatives Industry Association to the Stockbrokers Association of Australia, while maintaining the same operational framework as the previous legislation. This ensures that brokers who previously complied with the old requirements will continue to do so under the new Determination.