GST Legislative amendments

GST & FBT update for the public sector

- Overview

• Recent legislative amendments • Update on ATO public rulings

• GST: - Update on Australian Business Register (ABR) - “Notional” GST

- GST and Appropriations

- GST and Grants

• FBT: - Implications of the proposed cap self-education expenses

from an FBT perspective

GST Legislative amendments

Tax Laws Amendment (2012 Measures No. 6) Act 2013

• Margin scheme: margin for a taxable supply of an interest, unit or lease can be determined by allocating the original consideration on

acquisition/the approved valuation/GST inclusive market value in proportion to the subdivided portion of the land.

A New Tax System (Australian Business Number) Amendment Regulation 2013 (No. 1)

GST Legislative amendments (cont.)

Tax Laws Amendment (2013 Measures No. 2) Act 2013

Legislative Determinations

Goods and Services Tax: Correcting GST Errors Determination 2013

• specifies the circumstances in which you may, in working out your net

amount for a tax period, correct errors that were made in working out your net amount for an earlier tax period.

Legislative Determinations (cont.)

GST-free Supply (National Disability Insurance Scheme Supports) Determination 2013

A New Tax System (Goods and Services Tax) Waiver of Adjustment Note Requirement (Decreasing Adjustments Relating to

New GST guidance from ATO

GSTR 2013/1: tax invoices

• when you can treat a document as a tax invoice even though it does not meet all of the tax invoice requirements (under s 29-70(1A))

• when will Commissioner treat a particular document as a tax invoice • the circumstances in which a supplier need not issue a tax invoice

• when you can claim an input tax credit even if you don’t hold a tax

Legislative Determinations (cont.)

The following Legislative Instruments detail circumstances in which may not need to hold a tax invoice in order to claim GST credits:

• Acquisitions under an Agency Relationship

• Acquisitions by Recipients Using Electronic Purchasing Systems • Acquisitions Where Total Consideration Not Known

• Offer Documents and Renewal Notices

• Acquisitions from or Acquisitions by a Partnership

• Acquisitions from Property Managers • Creditable Acquisitions of Taxi Travel

New GST guidance from ATO (cont.)

GSTR 2013/2 - Adjustment notes

• On 21 August 2013, the Commissioner issued GSTR 2013/2, which sets out the requirements for adjustment notes under Div 29 of the GST Act.

• May be required where a GST liability or input tax credit (ITC)

entitlement for a tax period changes, and the supplier or recipient must make adjustments to their net amount in a later tax period.

• The requirements for a valid adjustment note are contained in s. 29-75(1) plus ‘legislative instrument’ which sets out such further information

New GST guidance from ATO (cont.)

GSTR 2013/2 - Adjustment notes (cont.)

• GSTR 2013/2 sets out the Commissioner’s views on the following issues - o the requirements for an adjustment note to be in the ‘approved

form’

o where a document is not in the approved form, the circumstances in which the relevant information can be clearly ascertained

New GST guidance from ATO (cont.)

GSTR 2013/2 - Adjustment notes (cont.)

• GSTR 2013/2 sets out the Commissioner’s views on the following issues - o information required to provide sufficient details of the effect of

the adjustment, the identity of the supplier or the recipient, and the difference in the price of a supply

o the circumstances in which adjustment notes can be combined with other documents, or be contained in two documents

o the circumstances in which the Commissioner will exercise the discretion to treat a document as an adjustment note

New GST guidance from ATO (cont.)

GSTD 2013/D4 : can you object to a private ruling that the

Commissioner makes on the way in which section 105-65 of Schedule 1 to the Taxation Administration Act 1953 applies or would apply to you?

Trading names and the ABR

• Trading names will continue to be displayed in the Australian

Business Register until 30 June 2014.

• From 1 July 2014 – ABN Lookup will cease displaying all trading names and only display registered business names (i.e. registered on ASIC)

• Invoice verification?

“Notional” GST

• GST does not apply to States’ property (s114 Commonwealth

Constitution – C’th cannot tax property of the States)

• Intergovernmental Agreement (IGA) – section 6 – jurisdictions “volunteered” for the GST legislation* to apply to property

– pay GST equivalent

• Taxation Administration Act 1953 – GST penalties and GIC

“Notional” GST (cont.)

• For Victorian public sector, following Victorian legislative reform -

from July 2012, transgressions re notional GST subject to full penalty regime. (Previously, outside scope of Taxation

Administration Act 1953)

• Refunds of overpaid notional GST: subject to standard rules in relation to correcting GST errors.

• Margin scheme and notional GST for public sector – no reduction in

Division 81 of GST Act

• Final determination prior to 1 July 2011: the A New Tax System

(Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2011 (No. 1) (Treasurer’s determination).

• PS LA 2013/2(GA): Fees/charges listed on Treasurer's final

Determination

– grandfathering only covers you if you have documented review of fees/charges against deeming regulation 81-10.01.

Division 81 (cont.)

Following fees/charges deemed subject to GST:

(a) Parking motor vehicle

(b) Road tolls

(c) Hire, use of facilities (except entry into national park)

(d) Use of waste disposal facility

(e) Pre-lodgement advice - relates to licence/permission application – if not compulsory.

(f) Supply of non-regulatory information

(g) Supply that is non-regulatory in nature

Taxable government grants and payments

o Business that is primarily in building and construction industry

o Makes payments to contractors for building and construction services o Has an ABN.)

• 1 July 2014 – improving compliance through third party reporting

and data matching

o Reporting by government entities of taxable government grants and other specified government payments

GST and Appropriations

Section 9-17(3) – three criteria

• Intra-government payments (includes local government) generally meet section 9-17(3) criteria.

To ensure payments outside the scope of the GST :

• GRE supplier should have letter from/agreement with GRE customer o whether the entities are both GREs

GST and Grants

When are financial assistance payments subject to GST?

• Is there a nexus between any supply by grantee and the grant payment? • E.g. $1.5 million government payment to Not For Profit to help build

new health care facility.

NFP required to: - invite relevant Minister to opening of facility.

- put up posters acknowledging grantor’s payment.

New FBT Guidance from ATO (coming soon!)

the purposes of section 57A of the FBTAA 1986? – being drafted

• Fringe benefits tax: when are the duties of an employee of a

FBT Legislative amendments

• Tax Laws Amendment (2012 Measures No.6) Act 2013 (No.84) o End concessional treatment of in-house benefits salary sacrifice o Generous transitional arrangements for salary sacrifice

arrangements entered prior 22 October 2012 - continue to access the concessional tax treatment until 31 March 2014.

• Fringe Benefits Tax Amendment (DisabilityCare Australia) Act 2013 o Increases the fringe benefits tax rate from 46.5% to 47% from 1 April

FBT - rates and thresholds

• Reasonable food component of LAFHA (TD 2013/4)

• Cents per km (TD 2013/7)

• Indexation for non-remote area housing (TD 2013/5)

• Record keeping exemption threshold: $7,779 (TD 2013/6) – from $7,642 • Benchmark interest rate: 6.20% pa (TD 2013/7) – down from 7.40%

• Car parking threshold: $8.03 (TD 2013/9) – up from $7.83 • Car limit for year: $57,466 (TD 2013/15) - unchanged

Salary packaging – what’s left?

– In-house Goods (gone from 1/4/14) – Portable Electronic devices (laptops,

phones etc) – Relocation

– Food and drink consumed on premises (can’t package)

– LAFHA – residents

– LAFHA – temporary residents

– Remote Area

– Car parking (small business / certain tax exempts)

– Entertainment facility leasing (tax exempts) – for how long?

– Dual Cabs

– Meal cards

– In-house Childcare

– In-house Recreational e.g. Gym

• Otherwise deductible

 Professional memberships

 Airport lounge / club memberships

 Income protection insurance

 Self-education

 Interest on investment loans

 Joint loans

• Concessional

 Superannuation – Now Limited

 Motor Vehicles (including novated and associated leases)

Changes to the Statutory Formula Method

Proposed cap on self-education expenses

13 April 2013 – former Government announced reforms to education expense deductions :

• $2,000 cap on employee work related education expense deductions from 1 July 2014.

2 August 2013: start date deferred to 1 July 2015.

• Still only a draft/discussion paper!

Self-education cap (cont.)

Currently:

• Employee self-education deduction uncapped after first $250

Proposed income tax treatment effective 1 April 2015:

• All expenses incurred in education activities subject to the cap: o Registration fees for conferences, workshops, seminars

o Textbooks and professional or trade journals o Stationery and photocopying

o Student union fees and student services and amenity fees

Self-education cap (cont.)

What education expenses are unaffected by the cap?

o Employer provided training.

Self-education cap – salary packaging

Proposal :

• Employers that support employees’ self-education through salary

packaging:

o FBT on any salary packaged amounts in excess of $2,000 o Employer deduction for FBT paid - no change for these

employees

o Self-employed deduction limited to first $2,000.

Self-education cap – salary packaging (cont.)

Practical implications for salary packaging

• Only effective for first $2,000 of expense (OD cap)

Benevolent employers? E.g.:

• Employer decides to reimburse $5,000 work-related education course fees to employee.

• Employee also incurred text books, stationery, computer and

software costs - total $1,500.

Questions?

Presenter :

• Daniel Tofler

Senior Manager, Government Services Moore Stephens Melbourne