Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 9 - Administration

Outline of Chapter

9.1 This Chapter explains the amendments made by Schedule 9 to this Bill. The amendments are of a technical and consequential nature and are necessary for the effective administration of GST.

9.2 References in this Chapter are to the GST Act, unless otherwise specified.

Detailed explanation of new law

Electronic lodgment of GST returns

9.3 This amendment varies the Commissioner's discretion to allow certain entities to lodge their GST returns non-electronically. [Item 3, subsection 31-25(2)]

9.4 Entities with an annual turnover of $20 million or more are required to lodge their GST returns electronically. Under subsection 31-25(2), this requirement does not apply where the Commissioner is satisfied that it is not practicable for such entities to lodge electronically.

9.5 This discretion is inconsistent with the requirements for notifications of other BAS amounts in section 288-5 of the TAA 1953 and may cause problems for the general administration of the BAS. The amendment will modify the discretion to remove practicability as a reason for large entities not to lodge electronically. The Commissioner will still have a discretion to allow businesses to lodge in a different manner, but only where the Commissioner considers that there are valid reasons for excluding a large entity from this requirement.

9.6 The effect of this amendment is to widen the Commissioner's discretion. It will no longer be limited to one specified circumstance.

Timing of GST credit entitlement

9.7 Under the GST law, the Commissioner must pay an entity a refund if the net amount of tax for a period is less than zero. As the law is currently silent on the timing of the entitlement to a credit, an amendment is required to specify when the entitlement arises.

9.8 This amendment clarifies that entitlement to a GST credit arises at the time when the entity notifies the Commissioner of a net amount of tax for a period that is less than zero. The entitlement will arise upon lodgment of a return under section 31-5 or upon lodgment of a further or fuller return under section 31-20. [Item 7, new section 35-10]

Credits of representative members of GST groups

9.9 Under Division 48, companies may elect to group, so that one company within the group (the representative member) deals with all the GST obligations of the group. The representative member is liable for all the GST debts of the group and is entitled to all the input tax credits of the members of the group.

9.10 The current RBA provisions of Part IIB of the TAA 1953 require the Commissioner to refund to the representative member any RBA surplus or excess credit of that entity, even though other members of the group may have a tax liability.

9.11 The amendments to the TAA 1953 allow the Commissioner to apply the representative member's RBA surplus or excess credit against any tax debt of other members of the group. This will prevent entities in a GST group from claiming credits through the representative member, while accruing debts in another entity of the group. [Items 12 to 14, section 8AAZA and subsections 8AAZLA(1) and 8AAZLB(1) of the TAA 1953]

Interest on overpayments of GST

9.12 The Taxation (Interest on Overpayments and Early Payments) Act 1983 provides for payment of interest where an amendment is made that reduces an entity's liability to tax. The definition of 'relevant tax' in subsection 3(1) of that Act needs to be amended to allow for the payment of interest where an assessment of GST is amended. [Item 17]

New penalty regime

9.13 A new uniform penalty regime is to be introduced by the A New Tax System (Tax Administration) Bill (No. 2) 2000 . As a consequence, existing administrative penalties in the GST Act and in Part VI of the TAA 1953 are being moved into Part 4-25 of Schedule 1 to the TAA 1953. [Items 4, 6, 8, 15 and 16, sections 288-40, 288-45 and 288-50]

9.14 A new Part 5-25 is being inserted into Schedule 1 to the TAA 1953 that deals with record keeping and other obligations of taxpayers. This includes uniform taxation requirements about approved forms, declarations and signatures. Consequential amendments are being made by this Bill to reflect the new generic provisions. [Items 1, 2, 5 and 9 to 11]