Time is of the Essence: Supplies, Grouping Schemes and Cancelled Transactions

Abstract

It has been said that Australian GST has no time of supply rules, but this view stems from a misunderstanding of the role of time of supply rules in other jurisdictions. A comparative approach reveals that such rules are simply attribution rules, responsible for allocating the payment of tax to particular tax periods, and Australia does have such attribution rules. Moreover, other jurisdictions frequently determine the status of a supply by reference to the real time of supply in the real world. Identifying the time at which a supply is made is of fundamental importance for a tax on transactions because the tax treatment of a transaction is determined at that time by reference to a range of features, which may include the character of the supply, the status of the supplier, the location and status of the recipient, and/or the location of goods. Two areas where the interaction between attribution time of supply rules and the real time of supply is significant are the treatment of transactions which span the entry into or exit from a GST group, and the treatment of cancelled transactions. Recent United Kingdom case law on VAT avoidance schemes provides a good illustration of the former, while recent New Zealand case law on land transactions deals with the latter. These cases reveal that Australia is not alone in its lack of legislative guidance on the real time of supply. The article concludes with some suggestions for real time of supply rules for Australian GST.

Keywords: Tax, GST, VAT, value added tax, consumption tax, goods and services tax, time of supply

JEL Classification: K34, H29