Answer:
Where GST payable is
exactly 1/11th of the total price, the tax invoice must contain a statement that
the total price includes GST or show the amount of GST payable.
Explanation:
Subdivision 29-C
of A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) deals
with tax invoices and adjustment notes. Subsection 29-70 deals specifically with
tax invoices and states:
(1) A tax invoice
for a taxable supply:
- must be issued by
the supplier, unless it is a recipient created tax invoice (in which case it
must be issued by the recipient); and
- must set out the ABN
of the entity that issues it; and
- must set out the price
for the supply; and
- must contain such
other information as the regulations specify; and
- must be in the
approved form
However, the Commissioner
may treat as a tax invoice a particular document that is not a tax invoice.
Regulation 29-70
of A New Tax System (Goods and Services Tax) Regulations (the
Regulations) sets out the additional information that is required as per
paragraph 29-70(1)(d) of the GST Act. The requirements vary depending on whether
the total amount to which the tax invoice relates is greater than or less than
$1000.
If the total amount,
including GST, payable for the supply or supplies to which the tax invoice
relates is $1000 or more, regulation 29-70(2) says that the tax invoice must
contain the following information:
- the words "tax
invoice" prominently stated;
- The date of issue of
the tax invoice
- The name of the
supplier;
- The name of the
recipient;
- The address or the
ABN of the recipient;
- A brief description of
each thing supplied; and
- For each description -
the quantity of the goods or the extent of the services supplied.
If the total amount,
including GST, payable for the supply or supplies to which the tax invoice
relates is less than $1000, regulation 29-70(3) says that the tax invoice must
contain the following information:
- The words "tax
invoice" stated prominently;
- The date of issue of
the tax invoice;
- The name of the
supplier; and
- a brief description of
each thing supplied.
In either case, where GST
payable is exactly 1/11th of the total price, the tax invoice must either
contain a statement that the total price includes GST or show the amount of GST
payable.
Where the quoted cost of
shearing includes provision of machinery etc in the price there is no need to
show a separate line item for each GST component on the tax invoice. It will be
sufficient to provide one GST amount on the invoice for the overall supply.
Please note: Draft Goods
and Services Tax Ruling GSTR 1999/D10 which deals with "Goods and Services
Tax: Tax Invoices" is available on our website at www.taxreform@ato.gov.au
Question 2 - Cost Plus:
How
is the GST liability calculated on a "cost plus" basis shearing
contract?
Answer:
The provision of a
shearing team on a "Cost Plus" basis will represent a taxable supply
by the contractor to the woolgrower if the contractor is registered or required
to be registered for GST. The method of calculating the contract amount and the
timing of notification of the cost to the woolgrower does not change the fact
that it is a taxable supply.
We understand that the
contractor includes items such as cost of labour, workers compensation,
superannuation, payroll tax, contractors overhead and margin in the contract.
Although these items are used to calculate the contract price, they do not
represent the supply that the contractor is making to the woolgrower. The supply
is the sheep shearing and the consideration payable is the amount calculated
using the individual items. The contractor is liable for GST on the taxable
supply not on the components.
The contractor will be
liable for GST, calculated on either the full contract or a per head basis,
depending on the method chosen.
Question
3 - Levy Shearing:
Is
the contractor liable for GST on fees charged to woolgrowers under a "levy
shearing" arrangement?
Answer:
Yes.
Explanation:
The fee charged by the
contractor for organising the shearing team will represent a taxable supply if
the contractor is registered or required to be registered. The contractor will
be liable for GST on the supply and will be able to claim input tax credits for
any creditable acquisitions that are made in relation to that supply, if
registered or required to be registered.
Question
4 - Cocky Shearing Arrangements
Is
the employer liable for GST on the labour component of a "cocky
shearing" arrangement?
Answer:
No.
Explanation:
Generally, employees
supply their labour to the employer and their wages represent consideration for
that supply. However, subsection 9-20(2) of the GST Act ensures that employees
are not considered to be carrying on an enterprise, therefore, there can be no
taxable supply between employees and employers. This exclusion is contained in
paragraph 9-20(2)(a) which states:
However, enterprise
does not include an activity, or series of activities, done:
(a) by a person as an
employee or in connection with earning withholding payments covered by
subsection (4) (unless the activity or series is done in supplying services
as the holder of an office that the person has accepted in the course of or
in connection with an activity or series of activities of a kind mentioned
in subsection (1)
Where the woolgrower
employs the shearers there will be no taxable supply as the shearers are not
conducting an enterprise. Note, however, that PAYG will apply to these payments.
Shearing
Contracts - Background Information
There are four basic
types of shearing operations.
1.
Full Contract
The contractor quotes a
specific price per head to cover the provision of a shearing team. The
contractor is the employer of each member of the team and covers them for
workers compensation, remits PAYG and pays the required superannuation
contributions. (Note: PAYG replaces PAYE from 1 July, 2000)
The contractor provides
in advance a quote for the work i.e $3.70 per sheep.
If the contractor is
providing machinery such as hand pieces, presses or grinders, this may be quoted
as a separate item or covered in the cost per head.
2.
Cost Plus
Under this method the
Contractor provides a full team and is the employer of the team. The contractor
is responsible for workers compensation, remitting PAYG, making superannuation
contributions.
The contractor does not
quote a set price before commencing the work. This may be because it is the
first time the contractor has provided a team for a woolgrower or the woolgrower
may require the team to carry out extra work such as fleece sampling and
measurement.
Before work commences,
the contractor explains the basis he will use to calculate his final account.
The rate of pay for each worker and extra costs are specified. The contractors
overheads and margin are then added on. This margin is usually specified as a
cost per sheep and can range from 15 to 32 cents per sheep. The contractor
provides a final account when shearing is completed.
3.
Levy Shearing
Under this method, the
contractor acts as an employment broker and provides a team which is employed by
the woolgrower.
The woolgrower is
responsible for workers compensation, remitting PAYG and making superannuation
contributions.
The contractor charges a
fee or levy for his services.
4.
Cocky Shearing
Under this method, the
woolgrower employs the members of the team directly.