Butcher Importers chooses to use the percentage option. Assuming that no percentage has been prescribed, the relevant uplift percentage is 10 percent. Therefore, Butcher Importers includes $12,500 rather than the actual transport, insurance and any additional loading, handling and facilitation costs in calculating the value of the taxable importation. Consequential amendments Interactions between reverse charging provisions and associate provisions These amendments clarify the interaction between the reverse charge provisions in Division 84 and the associate provisions in Division 72. Section 72-5 is an anti-avoidance provision which ensures that a supply can still be a taxable supply under section 9-5 in the absence of consideration when the supply is between associates. This is achieved by removing the requirement in section 9-5 for consideration to be given. However it does not explicitly remove the need for consideration to be provided for the supply to be reverse charged under Division 84. These amendments clarify that a supply between associates which meets the other requirements of Division 84 will still be a taxable supply in the absence of consideration. [Schedule 2, item 19, subsection 72-5(2)] The amendments also ensure that the ITC entitlement for supplies between associates for no consideration is worked out based on a formula in the associate rules in Division 72. In working out the input ‘full tax credit’ for the purpose of that formula, it is necessary to assume that the acquisition had been made solely for a creditable purpose despite the fact that Division 84 only applies to supplies where the corresponding acquisition is partly creditable. [Schedule 2, item 22, subsections 7245(1B) and (2)] Where there is inadequate consideration, the recipient uses a modified version of the partial ITC formula for reverse charged supplies in section 84-13. The input tax credit’ (a component of the formula) ‘full is worked out without grossing up what would have otherwise been the full input tax credit by 11/10 had the supply been a taxable supply under the basic rules in Division 9 rather than section 84-5. Given that the GST payable is worked out under section 84-12 by reference to price, and as a result of section 72-75 price is the GST exclusive market value, the full ITC payable is equal to the GST payable. It is therefore not appropriate to gross up the full input tax credit amount by the factor which usually applies to the formula in section 84-13. [Schedule 2, item 24, section
Butcher Importers chooses to use the percentage option. Assuming that no percentage has been prescribed, the relevant uplift percentage is 10 percent. Therefore, Butcher Importers includes $12,500 rather than the actual transport, insurance and any additional loading, handling and facilitation costs in calculating the value of the taxable importation. Consequential amendments Interactions between reverse charging provisions and associate provisions These amendments clarify the interaction between the reverse charge provisions in Division 84 and the associate provisions in Division 72. Section 72-5 is an anti-avoidance provision which ensures that a supply can still be a taxable supply under section 9-5 in the absence of consideration when the supply is between associates. This is achieved by removing the requirement in section 9-5 for consideration to be given. However it does not explicitly remove the need for consideration to be provided for the supply to be reverse charged under Division 84. These amendments clarify that a supply between associates which meets the other requirements of Division 84 will still be a taxable supply in the absence of consideration. [Schedule 2, item 19, subsection 72-5(2)] The amendments also ensure that the ITC entitlement for supplies between associates for no consideration is worked out based on a formula in the associate rules in Division 72. In working out the ‘full input tax credit’ for the purpose of that formula, it is necessary to assume that the acquisition had been made solely for a creditable purpose despite the fact that Division 84 only applies to supplies where the corresponding acquisition is partly creditable. [Schedule 2, item 22, subsections 7245(1B) and (2)] Where there is inadequate consideration, the recipient uses a modified version of the partial ITC formula for reverse charged supplies in section 84-13. The ‘full input tax credit’ (a component of the formula) is worked out without grossing up what would have otherwise been the full input tax credit by 11/10 had the supply been a taxable supply under the basic rules in Division 9 rather than section 84-5. Given that the GST payable is worked out under section 84-12 by reference to price, and as a result of section 72-75 price is the GST exclusive market value, the full ITC payable is equal to the GST payable. It is therefore not appropriate to gross up the full input tax credit amount by the factor which usually applies to the formula in section 84-13. [Schedule 2, item 24, section
C2015-051_Explanatory-Material.docx