Ruling Compendium

Text and examples have been added to the final Ruling showing how TPRS applies to consolidated groups (see paragraphs 51 to 57).

Explanatory text and examples added to the final Ruling (see paragraphs 51 to 53 and Example 8).

The legislation seems much broader, requiring that both the entity and the contractor provide the same type of supply irrespective of who it is supplied to.

Broadly, we interpret 'a supply' in column 1 of the table in section 396-55 of Schedule 1 to the Taxation Administration Act 1953 as the same supply referred to in column 2 (indicated by the definite article: 'the supply'). Applying IT services as an example and using the column headings, the law reads as:

'(A)n entity that makes a supply of an IT service and has an ABN, must report information about the provision of consideration by the entity to another entity wholly or partly for the supply by the other entity of an IT service, unless ... '

We also think that if it were intended to capture businesses who generally supply IT services, the first column would have been written more broadly rather than the making of a single supply attracting a reporting obligation.

This interpretation is supported by the Explanatory Memorandum to the Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018, which has multiple references to 'on their behalf' (for example see paragraphs 2.1 and 2.11 to 2.13), and accords with the GST concept of supply explained in GSTR 2006/9 Goods and services tax: supplies and referred to in the final Ruling.

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'Provides' and 'supplies' should not be used interchangeably because they have different meanings in different contexts.

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'Who is a supplier of a relevant service' needs to be made clearer. Suggested principles: nature and size of the goods sold, delivery destination, transport availability, etc.

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Merchants may have no interest in or knowledge of how the goods will be delivered. For example, the transport may be actioned using a range of service providers and carriage may not be by road.

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Example 3 of LCR 2018/D8 shows there is a supply of road freight services but does not make it clear who has the TPRS reporting obligation.

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Help merchants identify when it is the supplier versus when the business is considered to have passed on supplier status to another entity.

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Show how/if multiple supplies can arise by different parties in the delivery chain.

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Explain how transporters can differentiate a courier and road freight provider - simple tests? ATO and industry agreed criteria?

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What contractual terms could be implemented to determine whether reporting obligations apply and for which party?

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Non-resident merchants (with or without an ABN) who use Australian businesses for delivery of goods to Australian customers.

Regarding security, investigation or surveillance services:

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Guidance is needed on bundled services eg. where a single property maintenance fee or rental includes security services.

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Services provided by offshore suppliers

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Why is surveillance of country borders excluded?

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Accountants undertaking financial investigations, forensic accounting work, liquidation investigations, cyber security work?

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Security 'master' licence-holders and security training organisations? Private sector operated prisons and detention centres? Guard dog handling? Drone monitoring?

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Are safety or assurance services included in security services? For example, lifeguards, abseiling instructors, engineers working at Opal Tower, furniture or wine storage facilities.

The final Ruling provides principle-based guidance and examples. The application of the reporting requirement will depend on the facts and circumstances of any given scenario. We are therefore unable to address all of the services listed in this submission as definitively within or outside the reporting requirement.

The important issue when considering the application of the TPRS is what service the payer provides to their customer. Text has been added to paragraph 44 of the final Ruling clarifying that a payer only needs to report the amount they have paid to the entity they have contracted - they do not need to concern themselves with how that contractor might then deliver or provide the service to their client.

For example, a storage facility business providing storage services to their customer is unlikely to fall within the ordinary meaning of supplying 'security services'. The mere fact that a storage business may engage security contractors does not automatically make payments to those contractors reportable under the TPRS. All the facts and circumstances must be considered, particularly the relationship between the parties and what is being supplied (specifically whether there is a composite supply of a relevant service or mixed supplies which include a relevant service).

We will continue to work with the community to identify additional guidance that might usefully be provided to assist taxpayers to comply with their obligations. Appendix 2 of the final Ruling also sets out the Commissioner's practical approach to administering the potential reporting obligations of entities.

Appendix 1 of the final Ruling reflects this change.

Text has been added to the final Ruling (at paragraph 64) clarifying: 'Entities in a GST group use the turnover of the GST group.' Footnotes refer readers to the relevant sections of the GST Act.