Goods and Services Tax: Recipient Created Tax Invoice Determination (No. 20) 2016 for Labour Services relating to Primary Production Activities

General outline of determination

1. This determination is made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).
2. The determination allows a recipient of a taxable supply of labour services relating to primary production activities to issue recipient created tax invoices (RCTIs) to the supplier if the recipient determines the value of the taxable supply as set out in the determination.
3. 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 is about:

6.    Generally, tax invoices are issued by the entity that makes the supply under the GST Act.

7.        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.

8.        In accordance with this determination, a recipient of a taxable supply of labour services relating to primary production activities, may issue a RCTI for the supply if the recipient:

• establishes the value of the taxable supply after the supply is made using a method agreed between the recipient and the supplier based on a qualitative and/or quantitative process; and
• satisfies the requirements set out in Clause 7 of the determination.

What is the effect of this determination:

9.        The effect of this determination is to allow recipients of a taxable supply of labour services relating to primary production activities to issue RCTIs to the supplier. The determination also covers incidental supplies of goods necessary for the supply of the labour services, for example goods purchased to make minor repairs. The concession to issue RCTIs is given because the recipient of the taxable supply has the information to accurately calculate the value of the taxable supply.

10.         This determination is substantially the same as the previous determination that it replaces. Therefore a recipient who satisfied the previous determination will satisfy this determination and can continue to issue RCTIs under this determination.

11.         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:

12.         This determination replaces A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice (RCTI) Determination (No. 43) 2000.The replaced instrument is repealed on commencement of this determination.

Consultation:

13.         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 determination is considered minor or machinery in nature, and does not substantially change the law. 

14.         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

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. 20) 2016 for Labour Services relating to Primary Production Activities

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 the recipient of a taxable supply of labour services relating to primary production activities 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 the requirements of the Instrument are satisfied. This will simplify both the invoicing and payment processes for the recipient and the supplier of the labour services.

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.