Articles
- Details
Annual GST certificates for 2009–10
14 July 2010
Purpose
This bulletin is to remind councils that they must, no later than 15 September 2010, give the Minister for Local Government and Aboriginal and Torres Strait Islander Partnerships an official certificate stating that the local government has paid notional GST for the most recently completed financial year.
The annual GST certificate is required:
- under section 164 of the Local Government (Finance, Plans and Reporting) Regulation 2010
- under section 159 of the City of Brisbane (Finance, Plans and Reporting) Regulation 2010 for Brisbane City Council.
Background
The Local Government Act 2009 defines the GST amount that a local government may pay, under section 5 of the GST and Related Matters Act 2000, as ‘notional GST’.
In order to ensure local governments pay the notional GST, the Commonwealth, in section 15(aa) of the Local Government (Financial Assistance) Act 1995, has legislated to require the state to withhold from Financial Assistance Grant payments to local governments, amounts equivalent to notional GST that the local governments have not paid.
This Commonwealth requirement is reflected in section 228(6) of the Local Government Act 2009 that requires the minister not to distribute to a local government an amount equal to notional GST if the local government has not paid the notional GST.
Confirmation process
In order that the state can meet its obligations under the legislation, it needs to ensure that a local government has paid its notional GST. The term ‘has paid notional GST’ is interpreted as meaning ‘has paid all notional GST due’, or in other words ‘voluntary GST payments’.
Please note the term ‘paid all notional GST due’ goes hand in hand with the ability to claim GST input tax credits. That is, while government bodies may in fact receive net GST credits, this can only occur after accounting properly for all gross GST input tax credits and gross GST payments.
The primary method the state uses to ensure a local government has paid notional GST is to require a certificate of confirmation to be supplied to the responsible minister by each local government. Whilst the certificate is seen as evidence that a local government has paid notional GST, it could be displaced by evidence to the contrary. This might be provided by auditors or may come from other sources.
If no certificate is provided, the state would need to ascertain by other means that the GST, which the local government is to pay under the GST Act, has been paid. If the GST had not all been paid by a local government, the amount would need to be quantified before the Financial Assistance Grant could be paid to that local government. Otherwise the state could be in breach of the Commonwealth legislation.
Annual GST advice
The minister, through the Department of Infrastructure and Planning, seeks advice by Wednesday 8 September 2010 on voluntary GST payments by local government bodies for the period 1 July 2009 to 30 June 2010. This advice will then be provided to Queensland Treasury for confirmation with the Commonwealth.
Form of annual GST certificate
The form of the annual certificate is not prescribed. The following form will meet the requirements for this year.
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Executive Director
To assist compliance with Section 164 of the Local Government (Finance, Plans and Reporting) Regulation 2010 for the financial year ending 30 June 2010, we certify that notional GST has been paid by (name of Council) for the period 1 July 2009 to 30 June 2010. |
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XYZ |
ABC |
The following form will meet the annual requirements for Brisbane City Council:
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Executive Director
To assist compliance with Section 159 of the City of Brisbane (Finance, Plans and Reporting) Regulation 2010 for the financial year ending 30 June 2010, we certify that notional GST has been paid by Brisbane City Council for the period 1 July 2009 to 30 June 2010. |
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XYZ |
ABC |
