Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Taxation Laws Amendment (A Simpler Business Activity Statement) Bill 2003
Schedule 1— Amendments to provide small businesses with a simpler method of calculating Goods and Services Tax payments

A New Tax System (Goods and Services Tax) Act 1999

1 Section 17-99 (after table item 12A)

Insert:

12AA        Simpler method of calculating net amounts       Division 124

2 After Division 123

Insert:

Division 124—Calculating net amounts of GST using a ratio-to-turnover method

Table of Subdivisions

124-A    Commissioner to create a simplified method of calculating net amounts using a ratio-to-turnover approach

124-B    Choosing the simplified method of calculating net amounts using a ratio-to-turnover approach

124-C    No variation of net amounts

124-D    Record keeping requirements

124-1 What this Division is about

The Commissioner can create a simplified method of calculating net amounts, using a ratio-to-turnover approach, with a view to reducing the costs to small business of complying with the requirements of the GST.

If you elect to calculate GST using this method, your quarterly or monthly net amount is calculated by multiplying your turnover by a ratio determined by the Commissioner and printed on your BAS.

Subdivision 124-A—Commissioner to create a simplified method of calculating net amounts using a ratio-to-turnover approach

124-5 Commissioner may determine a simplified method of calculating net amounts using a ratio-to-turnover approach

(1)     The Commissioner may determine in writing an arrangement (to be known as the ratio method ) whereby your * quarterly or monthly turnover is multiplied by a * GST ratio notified to you by the Commissioner. The Commissioner’s determination shall:

(a)     specify the kind of entities to whom the method is available;

(b)     provide a method of working out the * net amount for entities to whom the method applies;

(c)     allow for alterations to be made to an entities * net amount to take account of extraordinary expenses arising during a payment period;

(d)     provide that, if for a particular * tax period, the * net amount worked out using the method is greater than zero, that amount is the full and final amount payable to the Commissioner for that * tax period; and

(e)     provide that, if for a particular * tax period, the * net amount worked out using the method is less than zero, that amount (expressed as a positive amount) is the full and final amount payable by the Commissioner, on behalf of the Commonwealth, to you for that * tax period.

(2)     The kind of entities specified under paragraph 124-5(1)(a) must have an * annual turnover not in excess of $2 million or such higher amount as the regulations specify.

(3)     In making a determination under subsection 124-5(1) the Commissioner must consult with business, professional, taxpayer and other relevant bodies and organisations.

(4)     This section has effect despite section 17-5 (which is about net amounts).

124-10 Quarterly or monthly turnover

Your quarterly or monthly turnover is an amount equal to that portion of your * current annual turnover attributable to the relevant * tax period.

124-15 Your GST ratio

Your Goods and Services Tax Ratio (to be known as your GST ratio ) for a tax period is a percentage that is:

(a)     worked out by the Commissioner, having regard to:

(i)the trading circumstances that exist for businesses operating in the same industry or industry sector (to be known as an industry-based GST ratio); or

(ii)                 your trading history and circumstances (to be known as your personal GST ratio); and

(b)     notified by the Commissioner to you before the day on which your GST payment is due.

Note:          Determining your GST ratio is a reviewable GST decision (see Division 7 of Part VI of the Taxation Administration Act 1953).

Subdivision 124-B—Choosing the ratio method

124-20 Choosing the ratio method

(1)  You may, by notifying the Commissioner in the * approved form:

                     (a)  choose to use the * ratio method if you are an entity to whom the method is available; and

(b)     revoke your choice to apply the method.

(2) However, you:

(a)     cannot revoke the choice within 12 months after the day on which you made the choice; and

(b)cannot make a further choice within 12 months after the day on which you revoked a previous choice; and

(c)     cannot choose to use the * ratio method in addition to any other method of calculation and payment.

(3)Your choice to use the * ratio method has effect from the start of the * tax period specified in your notice.

(4)Your choice to use a * ratio method ceases to have effect:

(a)       if you cease to be an entity to whom the method is available—from the start of the tax period occurring after the day on which you cease to be such an entity; or

(b)   if you revoke your choice to use the method—from the start of the tax period specified in your notice of revocation.

(5)The Commissioner may disallow your choice, even though you are an entity to whom the * ratio method is available, if the Commissioner is satisfied that you have a history of failing to comply with your obligations under a * taxation law.

Note:          Disallowing your choice is a reviewable GST decision (see Division 7 of Part VI of the Taxation Administration Act 1953).

(6)Notwithstanding subsection 124-20(2), the Commissioner may:

(a)       allow you to revoke your choice within 12 months after the day on which you made the choice; and

(b)   allow you to make a further choice within 12 months after the day on which you revoked a previous choice.

Note:          A decision by the Commissioner not to allow you to revoke your choice within 12 months after the day on which you made the choice, or not to allow you to make a further choice within 12 months after the day on which you revoked a previous choice, is a reviewable GST decision (see Division 7 of Part IV of the Taxation Administration Act 1953).

Subdivision 124-C—No variation of net amounts

124-25 Net amounts may not be varied

(1)If you have chosen to use the * ratio method, the Commissioner may not vary the * net amount arising from the application of the method.

(2)Notwithstanding subsection 124-25(1), the Commissioner may vary the net amount arising from the application of the * ratio method if, at or after the time you notify the Commissioner of your choice to use the method:

(a)   you have an * annual turnover in excess of $2 million or such higher amount as the regulations specify;

(b)   you make a statement to the Commissioner that is false or misleading in a material particular, because of information stated or omitted;

(c)   you act in a manner contrary to the Commissioner’s determination under 124-5(1); or

(d)   you otherwise fail to comply with your obligations under a * taxation law.

Subdivision 124-D—Record keeping requirements

124-30 Record keeping requirements

(1)  If you have chosen to use the * ratio method, you must keep records that record and explain your * quarterly and monthly turnover, and such other matters specified in the regulations, for at least 5 years after the completion of the transactions or acts to which they relate.

(2)  This section has effect despite section 70 of the Taxation Administration Act 1953 .

3 Section 188-5 (after table item 4)

Insert:

5

Ratio method turnover threshold

whether you can choose the ratio method of calculating net amounts (see Division 124)

4 Section 195-1

Insert:

GST ratio has the meaning given by section 124-15.

5 Section 195-1

Insert:

ratio method means an arrangement for the simplified method of calculating net amounts in respect of which a determination under section 124-5 is in place.

6 Section 195-1

Insert:

quarterly or monthly turnover has the meaning given by section 124-10.

A New Tax System (Goods and Services Tax Administration) Act 1999

7 Subsection 62(2) (after table item 37)

Insert:

37A           determining your GST ratio                         subsection 124-15(1)

8 Subsection 62(2) (after table item 37A)

Insert:

37B            disallowing a choice to use the                  subsection 124-20(5)

ratio method of calculating net

amounts

9 Subsection 62(2) (after table item 37B)

Insert:

37C            disallowing changes to your choice          subsection 124-20(6)

to use the ratio method of calculating

net amounts, within 12 months of

your original choice