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Ruling

Subject: GST and particular attribution rules

Question

Will the Commissioner make a determination under section 29-25 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to attribute the GST payable on a supply of surveying services by you to the tax period in which you receive the payment for the services.

Answer

No, the Commissioner will not make a determination under section 29-25 of the GST Act to attribute the GST payable on your supply of surveying services to the period in which you receive the payment for the services.

You must attribute the GST payable on your supply of services in your activity statement to the tax period in which you issue the tax invoice for the services.

Relevant facts and circumstances

You are an Australian entity which is registered for GST.

Your annual GST turnover is more than $2 million. You account for GST on an accruals basis.

You supply surveying services to domestic and commercial clients in Australia and receive consideration for this supply.

The building surveying services are provided throughout the design and construction stages of the proposed development.

When the client engages you to supply the building surveying services, you are required to apply for the permits on behalf of the client from the relevant councils. The levy is payable by the applicant (client) for a building permit and must be paid before the permit can be issued. The permits are then issued in the name of the client. You need to obtain the permit before any building surveying services are rendered and have a statutory obligation to pay for the levy before any surveying services commence.

You act as a paying agent when you pay the levy for building permits on behalf of the client. You are then reimbursed by the client for the levy paid by you.

You issue an invoice to the client for the supply of surveying services and reimbursement for the permit levy prior to the supply of any building surveying services. You issue the invoice for your services and disbursement together, before the services commence in order to receive reimbursement from the client for the permit levy.

As you account on an accrual basis and the invoice is issued for the supply prior to actually making the supply, you are required to attribute GST payable in the tax period which the invoice is issued even though the supply is not made. This places a significant cash flow burden on your business.

You have requested the Commissioner consider, due to timing of the invoice, whether the GST is attributable in the tax period in which the payment for the supply is received.

You incur the expenses for permit levies as the agent for the clients not as a principle.

The reimbursement of the permit levy is not a part of the consideration payable for your supply of surveying services.

You issue the tax invoice to the client for your supply of services and the reimbursements are separately itemised.

You do not claim input tax credits (ITC) for the expenses incurred by the client.

The average timeframe from the time an invoice is issued and the payment received is 60-90 days.

The timing for the domestic jobs between the date an invoice is issued and when building surveying services commence, is approximately 1 month as you are required to wait for a building permit to be issued before the surveying services commence.

The timing for the commercial jobs between the date an invoice is issued and when building surveying services commence, is open ended. It can be up to two years if there are variations on the project.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 29-5

A New Tax System (Goods and Services Tax) Act 1999 section 29-25

A New Tax System (Goods and Services Tax) Act 1999 subsection 29-25(1)

A New Tax System (Goods and Services Tax) Act 1999 subsection 29-25(2)

Reasons for decisions

Section 29-5 of the GST Act sets out the basic rules that determine the tax period in which an entity is required to attribute the GST payable on a taxable supply:

'(1) The GST payable by you on a taxable supply is attributable to:

(a) the tax period in which any of the consideration is received for the supply; or

(b) if, before any of the consideration is received, an invoice is issued relating to the supply-the tax period in which the invoice is issued.

(2) However, if you account on a cash basis, then:

a. in a tax period, all of the consideration is received for a taxable supply-GST on the supply is attributable to that tax period; or

b. if, in a tax period, part of the consideration is received-GST on the supply is attributable to that tax period, but only to the extent that the consideration is received in that tax period; or

c. if, in a tax period, none of the consideration is received-none of the GST on the supply is attributable to that tax period.'

Based on the facts provided, you account on a non-cash (accrual) basis and therefore, you are required to attribute all the GST payable on a taxable supply to the earlier of the tax period in which any of the consideration is received for the supply; or an invoice for the supply is issued.

Under subsection 29-25(1) of the GST Act, the Commissioner may, determine, in writing, the tax period or periods to which GST payable, input tax credits and adjustments for taxable supplies, creditable acquisitions and creditable importations of certain kinds are attributable. The Commissioner can only make a determination under section 29-25 of the GST Act, specifying a different tax period to that which would otherwise apply, if satisfied that the application of the basic attribution rules and any relevant special rules under the GST Act would produce an inappropriate result.

Goods and Services Tax Ruling GSTR 2000/29 provides guidance on attributing GST payable, input tax credits and adjustments and particular attribution rules made under section 29-25 of the GST Act

Determinations made under section 29-25 of the GST Act of particular attribution rules for taxable supplies, creditable acquisitions and creditable importations of certain kinds, or adjustments of a specified kind, override the basic attribution rules and the special rules in Chapter 4 of the GST Act but only to the extent of any inconsistency and only to the extent provided for in the determination.

The Commissioner can make these determinations only in the circumstances described in subsection 29-25(2) of the GST Act.

Where the Commissioner makes a determination, attribution must be in accordance with that determination for supplies and acquisitions of the kind specified in the determination.

However, there is no provision under this subsection for the Commissioner to make a determination for an entity or entities; as such determinations are made for all supplies or acquisitions of a particular kind. Any request from an entity seeking a determination for a particular kind of supply or acquisition that it makes must only be considered in terms of whether or not a determination should be made for all supplies or acquisitions of that kind. A determination made under subsection 29-25(1) of the GST Act is a legislative determination.

The Commissioner is satisfied that the basic attribution rules and relevant special rules apply inappropriately for the following kinds of supplies and acquisitions.

· supplies and acquisitions subject to a statutory cooling off period, where consideration is received or provided, or an invoice is issued, in a tax period that ends before the cooling off period expires;

· supplies made through banknote-operated, coin-operated machines and similar devices where removal of the notes and coins from the machine or similar device is the only way that the supplier has of knowing when consideration is received;

· supplies and acquisitions made through agents who provide the information required by suppliers and recipients for attribution purposes;

· supplies and acquisitions for which consideration is received or provided before the total consideration is known; and

· supplies and acquisitions made under contracts that provide for the retention of consideration.

If you make supplies or acquisitions of the kinds specified in these determinations, you must attribute any GST payable or input tax credits on those supplies or acquisitions, or adjustments in accordance with the particular attribution rule set out in the relevant determination but only to the extent of any inconsistency with the basic attribution rules and the special rules in Chapter 4 of the GST Act and only to the extent provided for in the determination.

If the supply or acquisition described in the request for a determination under subsection 29-25(1) of the GST Act does not involve any of the above situations, the Commissioner cannot make a determination.

Based on the facts provided, your supply of surveying services does not involve any of the above situations and therefore the Commissioner cannot make a determination under section 29-25 of the GST Act to attribute the GST payable on your supply of surveying services to the period in which you receive the payment for the services.

Accordingly, as you are currently using the accruals method of accounting for GST, you must report the entire amount of GST on your supply of surveying services in your activity statement to the tax period which you issue the tax invoice.