RCTI 2009/1 - Explanatory statement

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COMMONWEALTH OF AUSTRALIA

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

Explanatory Statement

General Outline of Instrument

1. This determination is made under subsection 29-70(3) of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act).

2. The purpose of this determination is to update existing legislative instruments that are in respect of recipient created tax invoices.

3. The determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Date of effect

4. The instrument commences on 1 July 2009.

5. The instrument will not apply retrospectively.

What this instrument is about

6. The purpose of this instrument is to update existing legislative instruments that are in force in respect of recipient created tax invoices.

7. Specifically, this instrument provides taxpayers with an alternative to the current requirement for the recipient to hold a written agreement with the supplier before issuing a recipient created tax invoice (RCTI). This will give recipients of supplies the option either of maintaining separate written agreements specifying the supplies to which each agreement relates and containing specific terms or of embedding these matters in tax invoices they issue.

8. This will provide flexibility and ease record keeping requirements as written agreements will not have to be retained where the alternative approach is adopted.

9. This instrument also makes technical corrections in regard to reference numbers in three instruments. The correct reference numbers for the relevant Legislative Instruments are reflected in the Tables, below.

What is the effect of this instrument

10. The effect of this instrument is that an embedded agreement will be treated as an alternative to a written agreement for the purposes of RCTI instruments. It will also make minor technical corrections.

11. The Tax Office believes the revenue impact will be nil as the instrument is not expected to alter the tax base. The instrument merely aims to reduce the compliance burden on taxpayers.

Background

12. Under subsection 29-70(3) of the GST Act, the Commissioner may determine in writing that a 'tax invoice' belonging to a class of tax invoices that may be issued by the 'recipient' of a 'taxable supply' is a 'recipient created tax invoice'. The Commissioner has made many such RCTI instruments since the commencement of the GST.

13. Amongst other things, the requirements of these RCTI instruments include the requirement that a recipient hold a written agreement with the supplier before issuing an RCTI.

14. This present instrument will provide an alternative to the requirement to hold a written agreement by embedding an agreement in a tax invoice issued by the recipient.

15. As a result of the instrument providing an alternative, the existing RCTI instruments (that make reference to the written agreement requirement) need to be updated to ensure that this alternative is reflected in those RCTI instruments.

16. The inclusion of an embedded agreement in the existing RCTI instruments will provide an alternative to the requirement for the parties to hold a written agreement from 1 July 2009.

Consultation

17. The matter was raised and discussed at meetings of the National Tax Liaison Group GST Subcommittee. No other consultation was undertaken as the instrument is considered minor or machinery in nature, and does not substantially change the law. 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.

RCTI Determinations to be amended by this instrument

18. Because some of the RCTI determinations that are in force refer to a recipient indemnifying the supplier for GST and penalty, and some do not, this determination is effected in two ways.

19. Table 1 below, lists those RCTI determinations that do not refer a recipient indemnifying the supplier for GST and penalty.

20. Table 2 below, lists those RCTI determinations that do refer to a recipient indemnifying the supplier for GST and penalty.

21. The amendments to the determinations in Table 1 do not need to refer to an indemnity.

22. The amendments to the determinations in Table 2 need to refer to an indemnity.

23. Clause 1 of the instrument numbered F2006B11607 on the Federal Register of Legislative Instruments is to be amended so that the determination may cited as A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 7) 2001 instead of A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 5) 2001.

24. Clause 1 of the instrument numbered F2006B11599 on the Federal Register of Legislative Instruments is to be amended so that the determination may cited as A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1A) 2000 instead of A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2000.

25. Clause 1 of the instrument numbered F2007B00005 on the Federal Register of Legislative Instruments is to be amended so that the determination may cited as A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 7) 2000 instead of A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 2) 2000.

26. Clause 1 of the instrument numbered F2008L02399 on the Federal Register of Legislative Instruments is to be amended so that the determination may cited as A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 1) 2008 instead of A New Tax System (Goods and Services Tax) Act 1999 Classes of Recipient Created Tax Invoice Determination (No. 3) 2008.

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Dated 7 May 2009

Signed by Shane Reardon
Deputy Commissioner of Taxation

Legislative References:
A New Tax System (Goods And Services Tax) Act 1999
the Act

Legislative Instruments Act 2003
the Act