Repeal of GST Regulations 1999

29 March 2019

The A New Tax System (Goods and Services Tax) Regulations 1999 (1999 Regulations)  are due to sunset and be remade before 1 April 2019.

The exposure draft regulations were released in December 2018 for public consultation and only one public submission was made by (the Financial Services Council). This highlighted perhaps the most controversial proposal in the draft - the complete renumbering of every regulation. Fortunately the complete re-numbering did not occur…. But there are some changes.

The A New Tax System (Goods and Services Tax) Regulations 2019 (2019 Regulations) commence from 1 April 2019.

Key changes

The 2019 Regulations were drafted to ‘remake and update’ the existing regulations ‘to the extent required’ without introducing policy change. Overall they maintain the operation of the 1999 rules and have been largely only updated for drafting purposes.

Outlined below are key changes which could be relevant to your business from 1 April 2019 and some preliminary thoughts as to whether ‘clarity’ has been achieved.

 

2019 Regulation

Changes and comments

Numbering


 

The 2019 Regulations now refer to ‘sections’ rather than ‘regulations’.

Certain sections have been renumbered however a ‘Finding Table’ was included at Attachment B of the Explanatory Statement. This is a helpful cross-reference guide between the sections in the 1999 and 2019 Regulations.

Dictionary - s196-1.01




 

 

Certain definitions previously included as sub-regulations have been relocated to the Dictionary. For example ‘related entity’ (was found at reg 33-15.03(5)).

Certain definitions have been modified. For example ‘acquisition’ has been amended to ‘clarify the interaction between the definition in the regulation and the Act’. The meaning should now be taken from the Act however for  the purpose of Div 40, the meaning is ‘affected’ by s40-5.05. So, there is now effectively two definitions of “acquisition”?

Definitions that have been both moved and amended include ‘securitisation entity’ and ‘representative’ (now replaced by ‘associated person’).

Subdivision 40-A-    Financial Supplies: sec 40-05.01 to 40-5.13



 

The minor drafting changes are intended to reaffirm the primary purpose of the section, that is to identify ‘financial supplies’ as:
- a financial supply under s40-5.09 not excluded under s40-5.12; or
- an incidental financial supply (s40-5.10).

One change to “clarify” now item 6 of the table in s40-5.09(3) (life insurance business) is the change to state ‘a life insurance business… which consists of the issuing of life policies’ . It is unclear however whether this change has created a definition that is broader, narrower or the same (it contrasts with other changes which are expressly states to ‘not alter the substantive operation of the provisions’.

Division 70 - Financial Supplies (reduced credit acquisition)

One issue addressed by FSC in their submission was the potential ‘unintended consequence’ to the operation of the regulations for life insurance and recognised trust schemes by removing ‘acquisitions on or after 1 July 2012” at reg 70-5.02 item 32. Treasury implemented the recommendation and reinstated the wording in s70-5.02 item 32.

In s70-5.02(1) item 7 ‘B-pay’ and ‘GiroPost’ were deleted and replaced with ‘BPAY’ and ‘Bank@Post’. The practical impact of this change is unclear.  


Division 197 - Transitional matters

Worth noting is the transitional rule at s197-1.02 that the 1999 Regulations continue to apply when working out net amounts for tax periods beginning before 1 April 2019.

 

 

(NB: This note is April Fools exempt).

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Authors

Andrew Howe

Director

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Rebecca Lawrence

Senior Associate

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Helena Papapostolou

Associate

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