COMMISSIONER OF TAXATION
The Commissioner of Taxation, Chris Jordan, gives notice of the following Rulings, copies of which can be obtained from Branches of the Australian Taxation Office or at http://law.ato.gov.au.
NOTICE OF RULING |
Ruling Number | Subject | Brief Description |
GSTR 2015/2 | Goods and services tax: development lease arrangements with government agencies | The Ruling sets out the Commissioner’s position on the goods and services tax (GST) treatment of particular transactions arising in the context of development lease arrangements entered into between government agencies and private developers. The Ruling applies on and from its date of issue. |
NOTICE OF ADDENDA |
Ruling Number | Subject | Brief Description |
GSTR 2002/5 | Goods and services tax: when is a ‘supply of a going concern’ GST-free? | The Addendum amends Goods and Services Tax Ruling GSTR 2002/5 to include an additional example which further illustrates, for the purpose of section 38-325 of the A New Tax System (Goods and Services Tax) Act 1999, those things that are necessary for the continued operation of an enterprise of leasing commercial property. The addendum also adds a footnote reference to the High Court’s decision in Commissioner of Taxation v. MBI Properties Pty Ltd [2014] HCA 49; 2014 ATC 20-474; (2014) 92 ATR 241. The Addendum applies on and from its date of issue. |
GSTR 2004/1 | Goods and services tax: reduced credit acquisitions | The Addendum amends GSTR 2004/1 in order to refer to the decision in Commissioner of Taxation v. MBI Properties Pty Ltd [2014] HCA 49; 2014 ATC 20-474; (2014) 92 ATR 241 and clarify, at paragraph 742, that acquisitions a recognised trust scheme makes by way of lease can in certain cases include acquisitions made under a lease granted before 1 July 2012. This clarification is relevant to the application of item 32 of the table in sub‑regulation 70-5.02(2) to the A New Tax System (Goods and Services Tax) Regulations 1999, which sets out what supplies acquired by a recognised trust scheme, are reduced credit acquisitions. The Addendum applies on and from 1 July 2012. |
NOTICE OF ERRATUM |
Ruling Number | Subject | Brief Description |
GSTR 2014/1 | Goods and services tax: motor vehicle incentive payments | The Erratum corrects Goods and Services Tax Ruling GSTR 2014/1 to insert a word omitted in error. The Erratum applies on and from 1 May 2014. |
Overview
The A New Tax System (Goods and Services Tax) Act 1999 was enacted to implement the goods and services tax (GST) in Australia as part of a broader reform of the Australian taxation system. This Act was introduced to address the need for a uniform indirect tax on a broad range of goods and services, aiming to replace a range of different indirect taxes such as wholesale sales tax and value-added tax. The enacting body was the Parliament of Australia, with the policy objective of creating a simpler and more efficient tax system that would reduce the burden of multiple indirect taxes on businesses and consumers. The legislation sought to ensure that the tax was applied in a fair and transparent manner, impacting both the supply and consumption of goods and services within Australia. The Act has been amended several times to refine the GST regime in response to evolving economic conditions and legal interpretations.
Scope and Application
The Commissioner of Taxation has issued several rulings and addenda that provide clarification and guidance on specific goods and services tax (GST) issues. GSTR 2015/2 pertains to the GST treatment of transactions arising from development lease arrangements between government agencies and private developers. This ruling applies to entities involved in such arrangements and is relevant to any transactions occurring from the date of the ruling's issuance. GSTR 2002/5, amended by an addendum, deals with the circumstances under which a 'supply of a going concern' is GST-free, adding an illustrative example for the continued operation of a leasing commercial property enterprise. This addendum applies from the date of its issuance and references a High Court decision for further context. GSTR 2004/1, also amended by an addendum, clarifies the application of reduced credit acquisitions for recognised trust schemes, particularly those made under a lease before 1 July 2012. This addendum applies from 1 July 2012. Lastly, an erratum to GSTR 2014/1 corrects an omission in the original ruling concerning motor vehicle incentive payments, effective from 1 May 2014.
Key Provisions
The Commissioner of Taxation has issued several rulings and notices that pertain to the A New Tax System (Goods and Services Tax) Act 1999. GSTR 2015/2 (paragraphs 4-10) outlines the Commissioner's position on the GST treatment of transactions arising in development lease arrangements between government agencies and private developers. The ruling clarifies that certain supplies made under these leases are considered taxable and specifies how GST should be accounted for in such scenarios. GSTR 2002/5, as amended by the Addendum (paragraphs 11-16), provides further clarification on when a 'supply of a going concern' is considered GST-free. The Addendum includes an additional example illustrating what is necessary for the continued operation of an enterprise of leasing commercial property and references the High Court’s decision in Commissioner of Taxation v. MBI Properties Pty Ltd. GSTR 2004/1, amended by another Addendum (paragraphs 17-22), clarifies that acquisitions made by a recognised trust scheme under certain leases can qualify as reduced credit acquisitions, with specific reference to leases granted before 1 July 2012. GSTR 2014/1 has been corrected by an Erratum (paragraph 23) to rectify an omission in the original ruling.
These rulings and addenda impose specific obligations on taxpayers and entities involved in the mentioned types of transactions. For instance, parties must correctly identify the nature of the supplies under development lease arrangements and ensure GST is applied as specified in GSTR 2015/2. Similarly, entities leasing commercial property must understand the conditions under which their operations qualify as a 'supply of a going concern' under GSTR 2002/5. Additionally, recognised trust schemes need to correctly classify their lease acquisitions as reduced credit acquisitions in line with the guidance in the amended GSTR 2004/1. The Erratum to GSTR 2014/1 ensures that taxpayers have the accurate information needed to apply GST to motor vehicle incentive payments.
Failure to comply with these rulings and the amendments can lead to various consequences. The A New Tax System (Goods and Services Tax) Act 1999 imposes penalties for non-compliance, including fines and interest on unpaid GST. In some cases, the Commissioner can also seek civil or criminal penalties for more serious breaches. The maximum penalties depend on the nature and severity of the breach, but they can include substantial fines and, in criminal cases, imprisonment. It is crucial for taxpayers and entities to adhere to these rulings to avoid potential penalties and legal repercussions.