Explanatory Statement
Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 18) 2016 for Friendly Societies
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 friendly society that is a recipient of a taxable supply of a defined commission based service to issue recipient created tax invoices (RCTIs) to the supplier, if the friendly society 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 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 friendly society who is a recipient of a taxable supply of a defined commission based service, may issue a RCTI for the supply if the friendly society:
- establishes the value of the taxable supply; and
- the recipient 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 friendly society who is a recipient of a taxable supply of a defined commission based service to issue RCTIs to the supplier. As the friendly society has access to the relevant information to calculate the value of the taxable 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. Therefore, a friendly society 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 legislative instrument 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. 34) 2000. The instrument being replaced is repealed on commencement of this determination.
Consultation:
12. 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.
13 In this case, no further consultation has been undertaken in the development of this determination because there is no substantive change from the previous determination and it is considered minor or machinery in nature.
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: Classes of Recipient Created Tax Invoice
Determination (No. 18) 2016 for Friendly Societies
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 friendly society who is a recipient of a taxable supply of a defined commission fee based service to issue the tax invoice (called recipient created tax invoice) to the supplier, if the friendly society determines the value of the taxable supply and the requirements of the Legislative Instrument are satisfied. This will simplify invoicing and payment processes for both the supplier and recipient.
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. 18) 2016 was enacted to address the need for simplified invoicing and payment processes in the context of commission-based services provided to friendly societies. This determination is made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) by the Commissioner of Taxation. Its purpose is to outline a class of tax invoices that may be issued by recipients of taxable supplies, specifically allowing a friendly society, which is a recipient of a taxable supply of a defined commission-based service, to issue recipient created tax invoices (RCTIs) to the supplier if certain conditions are met. This includes the friendly society determining the value of the taxable supply and satisfying specific requirements set out in the determination. The policy objective is to balance the facilitation of practical use of RCTIs by businesses while maintaining the integrity of the GST system. The determination is considered minor and machinery in nature, with no substantive change from the previous determination, hence it was not subject to further consultation.
Scope and Application
The Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 18) 2016 for Friendly Societies applies to friendly societies acting as recipients of a taxable supply of a defined commission-based service. The determination allows these entities to issue recipient created tax invoices (RCTIs) to the supplier if the friendly society determines the value of the taxable supply and satisfies the specified requirements. This legislation is a legislative instrument under the Legislative Instruments Act 2003, and it operates within the framework of the A New Tax System (Goods and Services Tax) Act 1999. The geographic and jurisdictional reach of this determination is effectively nationwide, as it applies across Australia in the context of the Commonwealth’s GST regulations. This determination replaces a previous determination (A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 34) 2000), which is repealed upon the commencement of this new determination. The new legislation does not introduce any substantive changes, and it is considered minor or machinery in nature, thus no additional consultation was necessary beyond what was required for the previous determination. The effect of this determination is to facilitate the invoicing process for friendly societies by allowing them to issue RCTIs, thereby simplifying payment and invoicing processes.
Key Provisions
The Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 18) 2016 for Friendly Societies (the Determination) primarily outlines the circumstances under which a friendly society can issue a recipient created tax invoice (RCTI) for a taxable supply of a defined commission-based service (section 7). According to this, a friendly society may issue an RCTI if it establishes the value of the taxable supply and meets the conditions set out in Clause 7 of the Determination. This provision is aimed at facilitating the practical use of RCTIs by businesses while maintaining the integrity of the GST system.
Under the Determination, a friendly society must determine the value of the taxable supply to be able to issue an RCTI. This involves establishing the monetary value of the commission-based service provided. Additionally, the friendly society must satisfy the specific requirements outlined in Clause 7 of the Determination, which likely includes criteria such as the nature of the supply, the GST turnover of the recipient, and any other conditions deemed necessary by the Commissioner. These requirements are intended to ensure that the use of RCTIs does not compromise the GST system's integrity.
Failure to comply with the requirements for issuing RCTIs may result in penalties, although the Determination does not explicitly state the penalties for non-compliance. Penalties for GST-related offences can vary and are governed by the GST Act. Typically, penalties for GST non-compliance can include fines and, in severe cases, imprisonment. The exact penalties depend on the nature and severity of the breach and can be determined by the courts. It is essential for friendly societies to adhere to the Determination to avoid potential legal and financial repercussions.
The Determination has a minor impact on compliance costs, as it is considered minor or machinery in nature, and does not substantially change the law. This means that there will be minimal implementation and ongoing compliance costs for entities affected by the Determination. The Determination aims to streamline the invoicing and payment processes for both suppliers and recipients of commission-based services, thereby reducing administrative burdens and enhancing efficiency.