GST Legislative amendments

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2 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 - Practical implications for salary packaging.

3 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) extends the one-year transitional period, which was originally provided to give businesses the time to register business names that would appear on the new national Business Names Register, to 30 June 2014.

4 GST Legislative amendments (cont.) Tax Laws Amendment (2013 Measures No. 2) Act 2013 ensures that certain services and other things supplied to a participant as a part of a National Disability Insurance Scheme (NDIS) plan under the National Disability Insurance Scheme Act 2013 (NDIS Act) are GST-free.

5 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. co-locates pre-existing ATO positions on correcting GST errors.

6 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 Reimbursements of an Employee etc) Legislative Instrument 2013

7 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 invoice.

8 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 Acquisition of a Motor Vehicle Under a Full or Split Full Novated Lease Arrangement

9 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 (1) plus legislative instrument which sets out such further information requirements as the Commissioner may determine.

10 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 o o the requirements for an adjustment note to be in the approved form where a document is not in the approved form, the circumstances in which the relevant information can be clearly ascertained the circumstances in which a document can be taken to be an adjustment note.

11 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 o o 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 the circumstances in which adjustment notes can be combined with other documents, or be contained in two documents the circumstances in which the Commissioner will exercise the discretion to treat a document as an adjustment note how adjustment notes can be corrected.

12 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 of Schedule 1 to the Taxation Administration Act 1953 applies or would apply to you? Yes, you can object, but only if you haven t lodged your BAS for the period in which you overpaid the GST.

13 Trading names and the ABR Trading names will continue to be displayed in the Australian Business Register until 30 June 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? Registration of government names duplication/volume/cost?

14 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 * Tasmania applied the GST law

15 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 public sector compliance obligations just because is notional

16 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 For fees and charges not listed on the Treasurer s determination, selfassess the GST treatment in accordance with Division 81 law and regulations.

17 Division 81 (cont.) Regulation 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 (h) Supply can be made by both an Australian government agency and non-australian government agency.

18 Taxable government grants and payments (1 July 2012 government entities in building and construction: 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 o Development of the arrangements will be subject to consultation by ATO.

19 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 o whether the payments are covered by an appropriation o whether the payments are only being paid to cover costs

20 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. Is the grant taxable?

21 New FBT Guidance from ATO (coming soon!) Fringe benefits tax: is a Local Health Network a public hospital for the purposes of section 57A of the FBTAA 1986? being drafted Fringe benefits tax: when are the duties of an employee of a government body exclusively performed in, or in connection with, a public or non-profit hospital for the purposes of subsection 57A(2) of the FBTAA 1986? being drafted

22 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 continue to access the concessional tax treatment until 31 March Fringe Benefits Tax Amendment (DisabilityCare Australia) Act 2013 o Increases the fringe benefits tax rate from 46.5% to 47% from 1 April 2014.

23 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 Reasonable travel and overtime meal allowance expenses (TD 2013/16)

24 Salary packaging what s left? FBT Exempt 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) Car Parking

25 Changes to the Statutory Formula Method Statutory rates: FBT years

26 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 August 2013: start date deferred to 1 July Still only a draft/discussion paper! New Government: has not ruled out proceeding with the reforms

27 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 o Accommodation and meals - if course away from home on 1+ nights o Running expenses of room set aside for education purposes o Travel expenses from home or work to place of education and back.

28 Self-education cap (cont.) What education expenses are unaffected by the cap? o Employer provided training. o Professional membership fees.

29 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. Employees whose employer does not support their self-education: o Not eligible for a deduction beyond $2,000.

30 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. No salary sacrifice or other formal arrangement in place. Employer can claim $5,000 deduction with no FBT. Employee can claim $1,500 as below the cap.

31 Questions? Presenter : Daniel Tofler Senior Manager, Government Services Moore Stephens Melbourne dtofler@moorestephens.com.au Ph: (03)