Review of the Legal Framework 
for the Administration of the GST

Corporates and business associations consultation meeting
Brisbane, 6 August 2008, 11.15am - 12.45pm

Summary of key issues

•	Key issues to cover during session: prior period adjustments, joint ventures, grouping, recipient created tax invoices.
•	Prior period adjustments – can adjust same BAS a number of times.  Administrative burden.  Option – if revenue neutral and no time differential but wrong entity, ignore.  If correct tax wasn’t accounted for – lodge a supplementary return (eg sales tax used this approach) – put both refunds and liabilities in it and include interest option – taxpayer gets paid interest on refunds where appropriate – based on entitlement date.  Another option, widen ATO’s discretionary powers.  
•	Recipient created tax invoices – requirement for separate agreement.  Option – incorporate into tax invoice.  Alternative – reduce information required in separate agreement.  
•	Is it time to relax the requirements around tax invoices?  Option – remove recipient names from tax invoices.  
•	Tripartite arrangements eg B2B transaction – if apply normal accounting practices, credit is not being claimed back.  Option – agreement between legal recipient and payer that entitlement transfers (so credit is claimed by payer).
•	Insurance regime complicated.  Example of insurer missing out on input tax credits see B2B solution above.
•	Need information on insured to comply with law.  Option – CTP standard recovery rate.
•	Capital/revenue distinction on BAS – for large corporates who make extensive capital purchases, it is very difficult to get precise capital amounts - equipment is bought into stock and then issued out.  Option – remove those boxes on BAS.
•	Some boxes on BAS do not relate to GST liability.  Option – review of BAS. 
•	Example – non-resident entity lodging a tender in Australia needs an ABN.  Problematic to get the form filled out – verification information for offshore directors and public officer requirements (for ABN).  Option – reduce proof of identity requirements. 
•	Different requirements for TFN, ABN, GST registration.  Option – register for GST without ABN.
•	Contra transactions in banking context – problem is recognition of the GST status of the supply.  Time cost. Option - Div 83/84 broad reverse charging approach, rather than exchange of tax invoices. 
•	Joint ventures – not a separate legal entity.  Operator accounts for tax (has accounts, money etc).  Legal entity compared with administrative entity – issue mixing up liabilities for different taxes between entities.  If lodge all BAS’s and instalment activity statements at once – timing issues for credits - issues of refunds policy across taxes.  Option – acknowledge each JV as a separate taxpayer (system issue).  Alternative option – JV operator treated as a separate taxpayer (without new ABN). 
•	Grouping – moving in and out of a group and issues around credits and liabilities.  If demerge, relationship between entities is gone.  Issues around entitlement to credit (eg volume rebate, leasing office space) – expenses made by members, not head entity.
•	Entity sells home loan and securitises to trust – bank has to own a unit in the trust.  Option – GST clean exit rule.
•	Interaction between definition of entity for GST purposes and definition of associate leads to uncertainty.  Option – define associate in GST context (not just via income tax definition).
•	Associate rules – market value applies, rather than agreed cost.  Then have adjustment rules.  Interaction problem.  Option – international practice, higher of cost or market value.
•	Electronic side of BAS – doing things on screen in real time would be helpful eg administering GST group.  
•	Reviewable GST decisions – can’t object against private ruling, have to go through assessment process.  Option – adopt ROSA principles.
•	Interactions between adjustment provisions and grouping including agreeing to GST liabilities for the purchaser and seller in a takeover.  Option – give Commissioner broader discretionary power to endorse parties agreeing who will do what (eg claim adjustment etc).