Tax Laws Amendment (2009 Measures No. 5) Act 2009 (118 of 2009)

Schedule 1   GST and representatives of incapacitated entities

Part 1   Amendments commencing on 1 July 2000

A New Tax System (Goods and Services Tax) Act 1999

8   After Division 57 of Part 4-1

Insert:

Division 58 - Representatives of incapacitated entities

58-1 What this Division is about

This Division sets out how to ascribe activities of a representative of an incapacitated entity between the representative and the incapacitated entity for GST purposes.

In particular, supplies, acquisitions and importations, and associated acts and omissions, by the representative are, in most cases, treated as having been by the incapacitated entity. This ensures that a transaction by the representative has the same consequences under the GST law as if the incapacitated entity had no representative.

However, in most cases, GST-related liabilities and entitlements are allocated to the representative for transactions that are within the scope of the representative's responsibility or authority.

58-5 General principle for the relationship between incapacitated entities and their representatives

(1) Subject to this Division, any supply, acquisition or importation by an entity in the capacity of a *representative of another entity that is an *incapacitated entity is taken to be a supply, acquisition or importation by the other entity.

(2) Subject to this Division, any other act, or any omission, of an entity in the capacity of a *representative of another entity that is an *incapacitated entity is taken to be an act or omission of the other entity, but only for the purposes of determining, for the purposes of the *GST law:

(a) whether a supply or importation is a *taxable supply or *taxable importation, or the amount of GST payable on the supply or importation; or

(b) whether an acquisition or importation is a *creditable acquisition or *creditable importation, or the amount of the input tax credit for the acquisition or importation; or

(c) whether an *adjustment arises in relation to a supply, acquisition or importation, or the amount of such an adjustment.

(3) To avoid doubt, if the other entity ceases to be an *incapacitated entity, this section continues to apply in relation to the supply, acquisition or importation, or to the act or omission, after the other entity ceases to be an incapacitated entity.

(4) To avoid doubt, to the extent that an act or omission referred to in subsection (2) relates to deciding to *account on a cash basis, that subsection does not apply for the purposes of determining, for the purposes of the *GST law, whether an *adjustment arises under Division 21 in relation to a supply or acquisition.

58-10 Circumstances in which representatives have GST-related liabilities and entitlements

General rule

(1) A *representative of an *incapacitated entity:

(a) is liable to pay any GST that the incapacitated entity would, but for this section or section 48-40, be liable to pay on a *taxable supply or a *taxable importation; and

(b) is entitled to any input tax credit that the incapacitated entity would, but for this section or section 48-45, be entitled to for a *creditable acquisition or a *creditable importation; and

(c) has any *adjustment that the incapacitated entity would, but for this section or section 48-50, have;

to the extent that the making of the supply, importation or acquisition to which the GST, input tax credit or adjustment relates is within the scope of the representative's responsibility or authority for managing the incapacitated entity's affairs.

Exceptions for certain taxable supplies

(2) This section does not apply to the GST payable on a *taxable supply to the extent that one or more of the following apply:

(a) the *incapacitated entity received the *consideration for the supply before the *representative became a representative of the incapacitated entity;

(b) if, under Division 83 or 84, the GST is payable by the recipient of the supply - the incapacitated entity provided the consideration for the supply before the representative became a representative of the incapacitated entity;

(c) if:

(i) the supply is a supply for which a *voucher to which Division 100 applies is redeemed; and

(ii) the incapacitated entity supplied the voucher before the representative became a representative of the incapacitated entity;

the consideration for the supply referred to in subparagraph (i) does not exceed the consideration provided for the incapacitated entity's supply of the voucher.

Exception for certain creditable acquisitions

(3) This section does not apply to an input tax credit for a *creditable acquisition to the extent that the *incapacitated entity provided the *consideration for the acquisition before the *representative became a representative of the incapacitated entity.

Exceptions for certain adjustments

(4) This section does not apply to an *adjustment to the extent that one or more of the following apply:

(a) if the adjustment relates to a supply - the *incapacitated entity received the *consideration for the supply before the *representative became a representative of the incapacitated entity;

(b) if the adjustment relates to an acquisition - the incapacitated entity provided the consideration for the supply before the representative became a representative of the incapacitated entity;

(c) the adjustment would not be attributable to a tax period applying to the representative in the capacity of a representative of the incapacitated entity.

Incapacitated entity not liable to pay GST etc.

(5) An *incapacitated entity or, if the incapacitated entity is a *member of a *GST group, the *representative member of that group:

(a) is not liable to pay the GST on a *taxable supply or a *taxable importation to the extent that a *representative of the incapacitated entity is liable under this section to pay the GST on the supply or importation; and

(b) is not entitled to the input tax credit for a *creditable acquisition or a *creditable importation to the extent that a representative of the incapacitated entity is entitled under this section to the input tax credit for the acquisition or importation; and

(c) does not have an *adjustment to the extent that a representative of the incapacitated entity has the adjustment under this section.

Other

(6) This section has effect despite sections 9-40, 11-20, 13-15, 15-15, 83-5 and 84-10 and subsections 48-40(1), 48-45(1) and 48-50(1) (which are about who is liable for GST, and who is entitled to input tax credits).

58-15 Adjustments for bad debts

(1) For the purposes of determining whether an *adjustment arises under section 21-5 or 21-15 for the whole or a part of a debt relating to a *taxable supply or *creditable acquisition for which a *representative of an *incapacitated entity is liable to pay GST, or is entitled to an input tax credit, under section 58-10:

(a) the adjustment cannot arise if, when the whole or part of the debt is written off, or has been *overdue for 12 months, the representative *accounts on a cash basis; but

(b) it does not matter whether the incapacitated entity accounts on a cash basis at that or any other time.

(2) This section has effect despite subsections 21-5(2) and 21-15(2) (which preclude adjustments for bad debts when accounting on a cash basis).

58-40 Effect on attribution rules of not accounting on a cash basis

(1) If:

(a) a *representative of an *incapacitated entity does not *account on a cash basis; and

(b) because of section 58-10, all or part of the amount of GST payable on a *taxable supply is payable by the representative, or the representative is entitled to all or part of the input tax credit for a *creditable acquisition;

then, to the extent that, but for this section, the GST or input tax credit would be attributable to a tax period that ended before the representative became a representative of the incapacitated entity, the GST or input tax credit is instead attributable to the first tax period applying to the representative in that capacity.

(2) This section has effect despite sections 29-5 and 29-10 (which are about attribution of GST on taxable supplies and of input tax credits for creditable acquisitions).