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Attribution Rules
The attribution rules in the A New Tax System
(Goods and Services Tax) Act 1999 (“The Act”) exist to determine when
the GST becomes payable and collectable. In income tax law, the
emergence of a tax liability or entitlement to a deduction is largely
based on the common law interpretations or the core provisions of the
Income Tax Assessment Act 1936. For the operation of the GST, however,
Division 29 of The Act was intended to make it as clear as possible when
a GST liability would be incurred, and presumably, to benefit the
Governmental cash flow position. The attribution rules in The Act determines when a taxable supply is made and when a creditable acquisition or importation occurs. The general rules regarding attribution are contained in Division 29, and under The Act, the Commissioner has some scope to specify the attribution rules of particular supplies or acquisitions.
The Attribution Rules Taxable Supplies
However, for entities operating on a cash based accounting system, the invoice requirement is not applicable. The GST is payable by a cash based entity as, and to the extent that, payment is received for the taxable supply. The Commissioner has stated that for cash based accounting entities, “you attribute GST on a taxable supply to the tax period in which you receive consideration for the supply, but only to the extent that the consideration is received in the tax period.”
Consideration
The receiving or disbursing of cash represents consideration when it changes hand. Consideration is given by a cheque when it is handed or posted to the supplier. Consideration is received when the cheque is received, or at the date on the cheque, whichever occurs first. A cheque need not be banked or cleared for consideration to have been made. If a cheque is dishonoured, and the recipient operates on a cash basis, the dishonoured cheque need not be included in the BAS. The recipient is entitled to lodge a revised BAS if the cheque has already been included.
However, if the recipient of a dishonoured cheque operates on an accruals basis, consideration is still deemed to have been given in the form of debt, and any recourse to reclaim the GST would be sought under the Division 21 – Bad Debts.
For traveller’s cheques, consideration is made and received when it is countersigned.
Credit Cards and e-Transactions
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