Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)
CHAPTER 7 - WORKING WITH THE GST
This chapter tells you about:
- tax invoices;
- adjustment notes;
- GST returns;
- payments and refunds;
- annual turnover; and
- miscellaneous provisions of the Bill.
Tax invoices are documents that substantiate creditable acquisitions. See 7.1.
Adjustment notes are documents that substantiate adjustments arising from adjustment events. See 7.9.
You must give GST returns to the Commissioner for each of your tax periods. See 7.14.
You pay net amounts that are more than zero to the Commissioner. See 7.22.
The Commissioner pays you net amounts that are less than zero. See 7.28.
You have a current annual turnover and a projected annual turnover in relation to a number of thresholds. See 7.33.
References to the administration and collection provisions in the Taxation Administration Act 1953 ; Commonwealth entities; and regulatory power. See 7.40.
7.1 An invoice is a notice of an obligation to pay. A tax invoice is a document that substantiates a creditable acquisition. A tax invoice must contain certain information that may not otherwise appear on an ordinary invoice. You can issue a tax invoice in addition to an ordinary invoice, or you may choose to forego issuing ordinary invoices, and only issue tax invoices. In most cases a normal receipt for a supply can easily be adapted to become a tax invoice.
7.2 Tax invoices are generally issued by the supplier. Tax invoices do not have to be issued unless requested by the recipient of a supply (the recipient). Suppliers must, if requested by the recipient, issue a tax invoice for all taxable supplies with a GST exclusive value of $50 or more within 28 days of the request. Subsections 29-70(1) and (2) and 29-80(1) .
7.3 Tax invoices must:
- show the Australian Business Number of the entity issuing it;
- show the price for the supply;
- contain such information as the regulations require; and
- be in the form approved by the Commissioner.
7.4 For example; the regulations could require that tax invoices must show;
- the words TAX INVOICE in a prominent place on the first page of the tax invoice; and
- name or trading name of the supplier; and
- name and address of the recipient; and
- date of issue of the tax invoice; and
- brief description of what was supplied; and
- quantity or volume of what was suppliedfor example, hours of labour, number of items; and
- either the:
- if the whole supply is taxable, the total amount payable for the supply (including GST) and a statement that the amount includes GST.
- the amount charged for the supply; and
- amount of GST; and
- total amount payable for the supply
7.5 There are some supplies for which the recipient of the supply (the recipient) determines the value of the supply rather than the supplier. The supplier does not know the value of the supply until the recipient has determined the value. In such situations it would not be practicable to require the supplier to issue the tax invoice for that supply.
7.6 If a recipient must issue tax invoices, the requirements for issuing tax invoices discussed above apply as if they were the supplier.
Example Abattoirs weigh, slaughter, grade and price the animals supplied to them. The abattoir also determines other costs such as levies. The abattoir will generally be in the best position to provide the information that a tax invoice is required to contain. In this situation it is probably more practicable for the abattoir to issue the tax invoice rather than the supplier of the animals.
7.7 There are special rules about agents issuing tax invoices on behalf of the principal. See 6.277.
7.8 If you make a taxable supply in satisfaction of a debt and you are not registered or required to be registered, the tax invoice requirements still apply to you. See 6.173.
7.9 Adjustments arising from adjustment events must be supported by adjustment notes. An adjustment note must contain information similar to a tax invoice. Subsection 29-75(1) . Hence adjustment notes are like an amended tax invoice.
7.10 To attribute a decreasing adjustment arising from an adjustment event, a supplier must have issued an adjustment note to the recipient. To attribute a decreasing adjustment arising from an adjustment event, a recipient is required to have an adjustment note from the supplier -- subsection 29-20(3) . See 3.73 for a discussion of adjustment events.
7.11 Adjustment notes must be issued by suppliers within 28 days of the recipient requesting an adjustment note. Suppliers must issue adjustment notes, even if the recipient has not requested one, within 28 days of becoming aware that the recipient has a decreasing adjustment arising from an adjustment event. A recipient must issue an adjustment note if the recipient issued the tax invoice. See 7.5 for recipient issued tax invoices. Subsection 29-75(1) .
7.12 Adjustment notes must:
- show the Australian Business Number of the entity issuing it;
- contain such information as the Commissioner determines; and
- be in the form approved by the Commissioner.
7.13 Suppliers are not required to issue tax invoices or adjustment notes if the GST exclusive value of the supply is less than $50, but may do so. However, to claim an input tax credit or make a decreasing adjustment where the supplier has not issued a tax invoice or adjustment note, the recipient must have sufficient records to substantiate them. For example, the recipient should have a record of:
- what was purchased; and
- from whom it was purchased; and
- when it was purchased; and
- the tax inclusive value of the supply, that is, the consideration for the supply; and
- in respect of adjustments, details and outcome of the adjustment event.
7.14 You must give a GST return to the Commissioner for each of your tax periods if you are registered or required to be registered -- subsection 31-5(1) . You must give your return to the Commissioner on or before the 21st day of the month following the end of the tax period to which the return relates -- paragraph 31-10(a) . The Commissioner may allow further time for returns -- paragraph 31-10(b) .
7.15 The return must be in the approved form, state your net amount and any other information required by the approved form, and must be signed unless it is lodged electronically. Subsections 31-15(1) and 31-30(1) .
7.16 You must give a return for a tax period even if you have not made any taxable supplies that are attributable to the tax period -- paragraph 31-5(2)(b) . You must give a return for a tax period even if your net amount for the tax period is zero -- paragraph 31-5(2)(b) .
7.17 However, where your net amount is zero because you have not made any supplies, acquisitions, or importations you may lodge your return in the manner the Commissioner requires rather than the usual form -- subsection 31-15(2) . For example, the Commissioner could provide for you to lodge your return by telephone.
7.18 Electronic lodgement of GST returns is where you give your return to the Commissioner by transmitting it in an electronic format approved by the Commissioner. Subsection 31-25(3) .
7.19 Electronic lodgement of returns is an option unless your annual turnover meets the electronic lodgement turnover threshold . You must give your return to the Commissioner electronically if your annual turnover is over $20 million. This amount can be increased by regulation. Subsections 31-25(1), (2) and (3) .
7.20 If you give your return to the Commissioner electronically, you must include your electronic signature in the return. Your electronic signature is a unique identification of you in electronic form that the Commissioner has approved -- section 195-1 . If your registered tax agent gives your return to the Commissioner electronically on your behalf, the return must contain your registered tax agents electronic signature. Section 31-30 .
7.21 The Commissioner can require additional returns at any time. The Commissioner can require such returns from you in your capacity as agent or trustee. Section 31-20 .
7.22 You are obliged to pay to the Commonwealth any amounts of GST that remain after your input tax credits have been netted off against your GST. Such net amounts are a debt due to the Commonwealth -- section 33-30 .
7.23 If your net amount for a tax period is greater than zero you pay the net amount to the Commissioner. Generally, you must pay it on or before the 21st day of the month following the end of your tax period to which the payment relates. However, under section 27-35 , your tax period can end 7 days either side of the end of a month. If your tax period ended in the first 7 days of a month, you must pay your net amount to the Commissioner by the 21st day of that month. Section 33-5 .
7.24 The Commissioner may extend the time for payment of certain amounts. These amounts are specified in section 33-20 .
7.25 If the Commissioner has reason to believe that you are about to leave Australia, he or she may bring forward the time for payment of certain amounts. These amounts are specified in section 33-25 .
7.26 If you are required to give your returns to the Commissioner electronically (see 7.18), you must pay electronically -- subsection 33-10(2) . Even if you are not required to give your returns to the Commissioner electronically, you may pay electronically -- subsection 33-10(1) . If you pay electronically you pay by way of electronic transmission approved by the Commissioner. If you do not pay electronically, you must pay in a manner the Commissioner has determined in writing. Generally, this will mean sending in a cheque with your return or providing a direct debit authority.
7.27 GST on taxable importations is generally payable at the same time and place, and in the same manner as customs duty is, or would be, payable on the goods. The Commissioner can allow further time for payment, and if he or she does so, can specify the place and manner of payment. Section 33-15.
7.28 The Commonwealth is obliged to pay to you any amounts of input tax credits that remain after you have netted off your GST and input tax credits for a tax period.
7.29 The Commonwealth is not obliged to pay your refund if you have a liability arising under another Act administered by the Commissioner. The Commissioner may apply your refund to the liability and pay you any remaining refund. Subsection 35-5(2) .
7.30 If you do not have a liability under another Act administered by the Commissioner, the Commissioner must pay you any amount by which your net amount for a tax period is less than zero. The Commissioner must generally pay such amounts to you within 14 days after you give your return for that tax period to the Commissioner. Subsection 35-5(1) .
7.31 If your net amount for a tax period is payable to you, the Commissioner must pay the amount into your bank, building society, or credit union account nominated by you. If you have not nominated such an account, the Commissioner is not obliged to refund your net amount until you nominate such an account. Subsections 35-10(1) and (3) .
7.32 However, some people do not use bank, credit union or building society accounts. For example, some do not use such accounts for religious reasons. The Commissioner may, in unusual circumstances, pay refunds other than into such an account. Subsection 35-10(2) .
7.33 Your annual turnover is relevant for the following thresholds:
- the registration turnover threshold -- see 2.9;
- the tax period turnover threshold -- see 4.12;
- the cash accounting turnover threshold -- see 4.24; and
- the electronic lodgement turnover threshold -- see 7.19.
7.34 Your annual turnover is an aggregate of the turnovers for all the enterprises that you carry on.
7.35 Generally, your annual turnover meets a threshold if your current annual turnover is at or above the amount specified. If your current annual turnover is below the amount specified you may still meet the threshold if your projected annual turnover is at or above the specified amount. If your current annual turnover is below the specified amount and you believe that your projected annual turnover is also below the amount, you may still meet the threshold if the Commissioner is not satisfied that your projected annual turnover is below the amount. Subsection 188-10(1).
7.36 Generally your annual turnover does not meet a threshold if your current annual turnover is below the specified amount. If your current annual turnover is above the amount specified you may not meet the threshold if your projected annual turnover is below the specified amount. If your current annual turnover is below the specified amount and you believe that your projected annual turnover is above the amount, you do not meet the threshold if the Commissioner is not satisfied that your projected annual turnover is above the amount. Subsection 188-10(2).
7.37 Your current and your projected annual turnover both calculate an amount based on the value of supplies that you make. Your current and your projected annual turnover are both the sum of the GST exclusive value of the supplies you make in a twelve month period. Your supplies that are input taxed are not included in the amount because you do not include GST in the price for such supplies. Your supplies to your associates for no consideration are also not included because, under Division 72 , GST may not be charged on such supplies. Your supplies that are not made in connection with an enterprise that you carry on are not included because you do not include GST in the price for such supplies. Subsections 188-15(1) and 188-20(1).
7.38 The twelve month period ends at the end of the current month. Subsection 188-20(1).
7.39 The twelve month period starts at the beginning of the current month. Subsection 188-15(1).
7.40 Division 177 contains those administrative provisions unique to the functioning of the Bill. Most of the provisions that support the collection and administration of GST, such as penalty provisions and information sharing, will be contained in new Part VI of the Taxation Administration Act 1953 .
7.41 Liability to GST cannot extend to the Commonwealth or to a defined category of Commonwealth entity. To ensure that Commonwealth entities are also effectively covered by GST, a notional liability to GST and a notional entitlement to input tax credits will instead apply to them. Section 177-1.
7.42 This provision expressly overrides an existing Commonwealth law which otherwise would provide an exemption from liability to GST. Section 177-5.
7.43 The Governor-General will be authorised to make regulations prescribing matters that are either required or permitted by the Act to be prescribed, or that are necessary or convenient to be prescribed for carrying out or giving effect to the Act. Section 177-15.