16-13 – Taxation arrangements for new councils
What’s new or changing
- Council finance staff in new councils should take action immediately, if they have not already done so, to ensure that the taxation issues associated with the new council are managed effectively.
What this will mean for your council
- There are numerous taxation issues that a new council must consider and address early in its establishment.
Australian Business Number (ABN)
- New councils will need to apply to the Australian Taxation Office (ATO) for ABN and taxation registration. Forms and application guide are available on the council portal.
- The ATO will accept emailed applications from new councils, which should be submitted with supporting information via email to LMGTechnicalIssues@ato.gov.au and cc Raymond.Watson@ato.gov.au .
Input tax credits and old ABNs
- New councils need to make a Section 29-70 application to the ATO immediately in order for:
- customers to be able to claim input tax credits on tax invoices that a new council may issue and which are invalid for reasons such as the council does not yet have a new ABN, or is continuing to issue tax invoices on an old council’s pre-printed stationery that has the old council’s name and/or ABN pre-printed;
- the new council to claim input tax credits on tax invoices issued by suppliers that contain the old council’s name and/or ABN;
- customers to be able to claim input tax credits on Recipient Claimed Tax Invoices (RCTI) issued by them to new councils with an incorrect council name/ABN, and pursuant to a now invalid RCTI agreement; and
- the new council to claim input tax credits on RCTIs it issues with an incorrect council name/ABN, and pursuant to a now invalid RCTI agreement.
- Council staff will also need to consider appropriate treatment and management of GST claims and liabilities including whether a head office/branch ABN structure is appropriate for the new council.
- There is a range of other issues new councils should be examining and working through with their own professional advisors based on their own individual circumstances. These include:
- transfer/re-registration of Deductible Gift Recipient approvals;
- payroll issues;
- Fringe Benefits Tax;
- Payroll Tax where councils have commercial enterprises;
- fuel tax credits; and
- RCTI and agreements.
- Council staff should also consider the taxation arrangements and issues that may flow from existing contractual arrangements, such as with suppliers and sundry debtors.
Where to go for further information
- Councils should be guided by their own circumstances and seek professional advice, as necessary.
- Further information can be found on the Stronger Councils website at http://www.strongercouncils.nsw.gov.au .
Acting Chief Executive