A New Tax System (Goods and Services Tax) (Simplified Accounting Methods – Government Entities Selling Food in Prisons and Detention Institutions) Determination 2025

This instrument, the A New Tax System (Goods and Services Tax) (Simplified Accounting Methods - Government Entities Selling Food in Prisons and Detention Institutions) Determination 2025, establishes two alternative simplified GST accounting methods that a government entity may elect to use to calculate its net amount for a tax period in respect of supplies and acquisitions made through specified sub-entities that sell food in prisons and institutions where people are lawfully detained (sections 1, 3, 6). It operates as a determination under paragraph 123-5(1)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (the Act) and commences the day after registration (sections 1, 2, 3).

Mechanically, the instrument does three things. First, it sets eligibility criteria that limit which government entities and which sub-entities can elect the simplified methods (section 6). Second, it prescribes two formulas , Method A (section 7) and Method B (section 8) , by which the net amount for a tax period is worked out, each specifying stepwise computations for the GST component and the input tax credits component. Third, it repeals the earlier Simplified GST Accounting Methods Determination (No. 28) 2015 in its entirety (Schedule 1).

Method A works by: (a) calculating a ratio of trading stock purchases that are creditable acquisitions to total trading stock purchases for the sub-entity for the tax period (steps 1-3 in section 7); (b) applying that ratio to total consideration received for sales by the sub-entity for the tax period and then multiplying by one-eleventh to derive GST (steps 4-5 in section 7); and (c) offsetting that GST figure with input tax credits equal to the sum of input tax credits to which the sub-entity is entitled for creditable acquisitions and importations attributable to the tax period (section 7(1)). Method B uses a similar ratio but requires the ratio to be fixed by reference to a continuous 4 week sample period in a specified window, applies the ratio to sales for the tax period to derive GST, and computes input tax credits by applying the ratio to trading stock purchases for the tax period and multiplying by one-eleventh (section 8(1)). Both methods yield a net amount equal to GST minus input tax credits, and Method A expressly allows increases or decreases for adjustments for acquisitions relevant to the sub-entity for the tax period (section 7(2)).

The instrument is elective. A government entity must choose to use one of the simplified methods and notify the Commissioner as required under section 123-10 of the Act, specifying which sub-entities it will apply the method to and which method it has chosen (section 6(2)). The government entity must apply the same method to all sub-entities it selects (section 6(3)). Eligibility includes a GST turnover threshold calculated as if the sub-entity were a separate entity (section 6(1)(e)), a restriction on sub-entities having point-of-sale equipment that can identify and record GST-free and taxable supplies and totals (section 6(1)(g)), and a requirement that the sub-entity’s main activity is selling food mainly in an unchanged form (section 6(1)(d)).

The instrument does not itself contain penalty provisions or an enforcement regime; it is made under and operates within the Act’s framework (sections 3, 4 note). It also repeals the prior 2015 instrument in full (Schedule 1), replacing the earlier simplified accounting method rules for the specified circumstances.

This determination codifies statutory concepts and stepwise accounting formulas. Several defined and referenced concepts are material to eligibility and calculation (section 4 and the method sections).

Key definitional points in the instrument itself

• Act: the A New Tax System (Goods and Services Tax) Act 1999, which provides the broader statutory framework the determination sits within (section 4). The instrument also notes that a number of expressions used are defined in section 195-1 of the Act, including creditable acquisition, input tax credit, GST-free, retailer, registered, net amount, simplified accounting method, tax period, and others (section 4 note). The determination therefore relies on the Act for fundamental GST vocabulary (section 4 note).

• Sub-entity: defined in this instrument as a branch or other similar organisational unit within a government entity that is not a separate entity, is not registered, and can be separately identified by reference to the nature of activities it carries on or by its location (section 4). This is the unit to which the methods apply.

• Trading stock: defined in the instrument to include anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of carrying on an enterprise (section 4).

Eligibility and scope concepts

• Retailer and registered: the government entity must be a retailer and be registered. These expressions are referenced as defined in the Act (section 6(1)(a)-(b), section 4 note).

• Mixed supplies of food at a single premises: the sub-entity must, through the premises, make both taxable and GST-free supplies of food at the same premises while carrying on the government entity’s enterprise (section 6(1)(c)). The instrument thus targets mixed-supply contexts at prison/detention premises.

• Selling food mainly in unchanged form: the sub-entity’s main activity must be selling food and mainly selling it in an unchanged form (section 6(1)(d)). The instrument requires this as a factual predicate for the simplified method.

• GST turnover threshold: the sub-entity’s GST turnover must not exceed $2 million, with turnover worked out as though the sub-entity were a separate entity (section 6(1)(e)). The instrument thus applies a per-sub-entity turnover cap that is calculated on a hypothetical separate-entity basis.

The instrument affects a specific set of actors in the GST system and, indirectly, people and entities with operational relationships to those actors.

Primary affected parties

• Government entities that are retailers and are registered for GST (section 6(1)(a)-(b)). Only a government entity meeting those two conditions may choose to use the simplifications (section 6(1)).

• Sub-entities within such government entities that meet the instrument’s criteria. The instrument defines sub-entity as a branch or similar unit which is not a separate entity, not registered, and can be separately identified by activity or location (section 4). The simplified methods apply to supplies and acquisitions made through those sub-entities (section 6(1) and 7-8).

Eligibility constraints that determine the affected sub-entities

• Mixed supplies at same premises: the sub-entity must make both taxable and GST-free supplies of food at the same premises in the course or furtherance of the government entity’s enterprise (section 6(1)(c)). This confines the effect to sub-entities operating a mixed-supply point of sale.

• Main activity and form of food: the sub-entity’s main activity must be selling food and it must mainly sell the food in an unchanged form (section 6(1)(d)). This narrows application to outlets selling unaltered food items rather than prepared or transformed meals, according to the instrument’s terms.

• Location: sub-entities must be located in prisons or institutions where people are lawfully detained (section 6(1)(f)). The geographical and institutional placement is therefore specific.

• GST turnover threshold: sub-entities must have GST turnover not exceeding $2 million calculated as if the sub-entity were a separate entity (section 6(1)(e)). Sub-entities over that turnover cap are not eligible.

• Point-of-sale capability: sub-entities that have POS equipment able to identify and record each separate supply as GST-free or taxable and the totals of GST-free sales and total sales are excluded (section 6(1)(g)). The instrument therefore targets sub-entities that lack the technological capability to apply per-sale GST treatment at the POS.

Who decides and who files

• The government entity chooses whether to elect the simplified method, selects which sub-entities to include, and selects the method (section 6(2)). The instrument requires that the choice be communicated to the Commissioner in the government entity’s notice under section 123-10 of the Act, and that the government entity use the same method across all selected sub-entities (sections 6(2)-(3)).

This instrument creates or records a set of duties and procedural rights for government entities and their sub-entities; it relies on the Act for broader statutory duties and powers.

Election duty and notification requirement

• Duty to elect: a government entity may choose to use one of the simplified methods; the instrument is elective rather than mandatory (section 6(1)). Choosing is the initiating act.

• Notification content duty: when choosing, the government entity must, in its notice to the Commissioner under section 123-10 of the Act, specify which sub-entities it will apply the method to and which method it has chosen (section 6(2)). This is a mandatory content requirement for the notice.

Uniform application duty

• Duty to use the same method: the government entity must use the same simplified accounting method for all sub-entities it has chosen to apply the method to (section 6(3)). The instrument enforces uniformity across selected sub-entities.

Calculation duties

• Compute net amount under chosen method: once elected, the government entity must calculate the net amount for each tax period in respect of supplies and acquisitions made through the chosen sub-entities according to the formula and stepwise method in either section 7 (Method A) or section 8 (Method B). Each method sets out explicit steps for calculating GST and input tax credits, and the net amount is GST minus input tax credits (sections 7(1), 8(1)).

• Method A specifics: for Method A the government entity must (per steps in section 7(1)) work out total consideration for trading stock purchases for the sub-entity for the tax period, then the total consideration for those purchases that are creditable acquisitions, form the ratio, apply it to total sales consideration, multiply by one-eleventh to derive GST, and then subtract the sum of input tax credits to which the sub-entity is entitled for creditable acquisitions and importations attributable to the tax period (section 7(1)). The entity must also account for any adjustments for acquisitions relevant to the sub-entity that increase or decrease the net amount (section 7(2)).

• Method B specifics: for Method B the government entity must select a continuous 4 week sample period falling within a specified seasonal window for the relevant tax period (definition of 4 week sample period in section 8). It must compute the ratio of creditable trading stock purchases to total trading stock purchases for that sample period (section 8(1) steps 1-3), apply that ratio to total sales consideration for the tax period and multiply by one-eleventh to derive GST (steps 4-5), and compute input tax credits by applying the ratio to total trading stock purchases for the tax period and multiplying by one-eleventh (section 8(1) input tax credits steps).

The determination does not itself create or specify penalty provisions or an enforcement mechanism; it is a determination made under the Act and therefore sits within the Act’s enforcement architecture (section 3 and section 4 note). The instrument uses mandatory words such as must where it imposes duties, for example the duty to specify sub-entities and method in the notice to the Commissioner (section 6(2)) and the duty to use the same method for all chosen sub-entities (section 6(3)), but it does not, within its own text, set out offences, penalties, administrative sanctions, or particular audits or compliance procedures.

Enforcement inference and administrative follow-up

• Administrative enforcement would therefore be exercised under the Act’s existing compliance and penalty provisions, which the instrument references by operating under the Act (section 3). The instrument ties election and notification to the Act’s section 123-10 process (section 6(2)), which implies that failures to notify as required will be addressed through the Act’s mechanisms. The instrument does not specify timeframes for the notice or consequences for failing to notify beyond the Act’s processes.

• The instrument prescribes numerical methods for calculating net amounts (sections 7 and 8). If a government entity calculates net amounts incorrectly, enforcement action or adjustments would be by reference to the Act and its administrative rules. The instrument itself allows adjustments for acquisitions relevant to the sub-entity under Method A (section 7(2)), which signals that adjustments recognised under the Act must be incorporated into the simplified accounting calculations where relevant.

Auditability and evidentiary aspects

• The methods require underlying figures: total consideration for trading stock purchases, identification of creditable acquisitions, total consideration received for sales, and for Method B the 4 week sample data (sections 7 and 8). The accuracy of calculations therefore depends on the availability and reliability of those figures. The instrument does not prescribe record retention periods or documentary standards; any recordkeeping and audit exercise would be governed by the Act and any applicable taxation administration rules. The instrument’s silence on penalties means the primary enforcement levers remain the Act’s provisions for audit, assessment, amendments, and penalties.

Relevance of repeal to enforcement

This determination operates within the statutory framework of the A New Tax System (Goods and Services Tax) Act 1999 (the Act) and depends on that Act for definitions, notification procedures, and the broader GST regime.

Direct references to the Act

• Authority and legislative basis: the instrument is made under paragraph 123-5(1)(a) of the Act (section 3). That paragraph is the statutory head of power for the Commissioner to make determinations of this kind; the instrument therefore derives its legal force from the Act.

• Definitions: the instrument explicitly notes that many expressions used are defined in section 195-1 of the Act, listing a number of them, such as creditable acquisition, input tax credit, registered, retailer, simplified accounting method, taxable supply, GST-free, and net amount (section 4 note). Consequently, the instrument must be read in conjunction with the Act’s definitions to determine the precise legal meanings of those expressions.

• Notifications and administrative link: the instrument requires the government entity’s notice under section 123-10 of the Act to specify the sub-entities and the chosen method (section 6(2)). This creates a procedural interface with the Act’s notice and election machinery.

Interaction with previously made instruments

• Repeal of prior instrument: Schedule 1 repeals the A New Tax System (Goods and Services Tax) Act 1999 Simplified GST Accounting Methods Determination (No. 28) 2015 in its entirety (Schedule 1). The effect is that, for the subject matter covered by the 2015 instrument, the 2025 determination now governs; the instrument thus directly displaces the earlier instrument.

Subsidiarity and reliance on existing rules

• Adjustments and input tax credit entitlements: Method A requires that input tax credits for the tax period be the sum of all input tax credits to which the sub-entity is entitled for creditable acquisitions and creditable importations attributable to the tax period (section 7(1)). That entitlement and the rules for attribution and adjustments are governed by the Act’s substantive provisions related to input tax credits and adjustments. Method A also expressly allows net amounts to be increased or decreased if the government entity has any adjustments for acquisitions relevant to the sub-entity for the tax period (section 7(2)), again pointing the user to the Act’s mechanics for acquisitions and adjustments.

The instrument itself contains a limited amendment history and a single explicit repeal. The text shows the instrument was made and dated 22 August 2025 (front matter) and that it commences the day after it is registered (section 2). The instrument’s Schedule 1 contains a repeal item which repeals the whole of A New Tax System (Goods and Services Tax) Act 1999 Simplified GST Accounting Methods Determination (No. 28) 2015 (Schedule 1).

What the Schedule 1 repeal does

• The instrument repeals the 2015 instrument in full (Schedule 1, item 1). The Schedule states "The whole of the instrument" and the action "Repeal the instrument" with the name of the 2015 determination. This is an explicit, whole-of-instrument repeal replacing the prior instrument for the subject matter addressed.

Commencement and references about amendment context

• The commencement provision (section 2) includes a table that states the whole of this instrument commences the day after it is registered. The table includes a note that the table relates only to the provisions as originally made and will not be amended to deal with later amendments. Section 2(2) clarifies that any information in column 3 of the table is not part of the instrument and may be edited in any published version. These are drafting matters that limit the instrument’s internal amendment-history markings.

Authority clause and potential for future amendment

• The instrument is made under paragraph 123-5(1)(a) of the Act (section 3), which is the statutory basis for making determinations of the kind. Under that authority, further determinations or amendments could be made in future by the Commissioner under the Act; the instrument itself, as recorded here, does not contain subsequent amendment entries.

No transitional amendment text

• The instrument does not include explicit transitional provisions addressing entities that were operating under the repealed 2015 instrument. The Schedule effecting the repeal is straightforward and unconditional within the instrument’s text. There are no savings or transitional provisions included in the instrument as printed.

Dated instrument and timing

• The instrument is dated 22 August 2025 in the header and commences the day after registration (sections 1, 2). The instrument includes a note explaining the commencement table is specific to the instrument as originally made and may not be amended to cover later changes (section 2 note).

The instrument, as provided, contains no references to judicial decisions, tribunal determinations, litigation, appeals, or case law. It does not cite or record any litigation history or judicial interpretations; it is a stand-alone determination made under the Act (sections 1-3).

Implications of absence of litigation references

• No precedential interpretations within the instrument: because the instrument does not include case law or references to court decisions, there are no judicial interpretations embedded in the text to guide how its provisions should be applied in contested situations. Users are therefore to rely on the text itself and, where disputes arise, on the Act and any judicial or administrative decisions that may be developed after this determination is issued.

• Dispute resolution and future litigation: the instrument’s provisions for election, calculation and eligibility may be subject to challenge or interpretation in future proceedings, but the instrument itself does not record any such history. Any litigation that may arise will be provisioned under the Act’s dispute, objection and review mechanisms rather than the determination itself providing guidance on prior case outcomes.

Practical consequences

• No case-law-based examples to follow: practitioners cannot point to litigation recorded in the instrument to predict how courts or tribunals would construe key phrases such as "mainly sells the food in an unchanged form" or how strictly the "not have point-of-sale equipment" disqualification is to be applied. The absence of litigation history in the instrument means those phrases will require administrative interpretation or, where contested, judicial determination post-issuance.

• Repeal of 2015 instrument without judicial context: the instrument repeals the 2015 determination (Schedule 1) but does not provide any transitional judicially-mediated clarifications. There is therefore no recorded litigation resolving disputes about the 2015 instrument present in this determination.

Recommendation for practitioners (procedural, not prescriptive)

• Because the instrument provides formulations without precedential litigation interpretation, entities and advisers should document factual records supporting eligibility elements and the computations used, and be prepared to justify those positions under the Act’s general compliance and review processes. The instrument does not provide litigation guidance but will be interpreted against the Act and any emerging administrative or judicial authority going forward.

This instrument contains several operational traps and boundary conditions that practitioners should watch, because the eligibility and calculation rules are precise and interact with factual and technological circumstances.

1. Eligibility requires the sub-entity to be unregistered and not a separate entity (section 4 definition of sub-entity; section 6(1)). If an organisational unit is registered in its own right or is a separate legal entity, it is not a sub-entity for the purposes of this instrument and the simplified methods do not apply (sections 4, 6(1)). Entities must therefore verify corporate and registration status before electing.

2. The GST turnover cap is applied as if the sub-entity were a separate entity (section 6(1)(e)). This is counterintuitive in a government entity context where turnover is often assessed at the parent level. The instrument requires the hypothetical separate-entity calculation. A failure to correctly compute or to treat the cap at the sub-entity level could render a chosen method inapplicable.

3. The instrument disqualifies sub-entities that have point-of-sale equipment that can identify and record each separate supply as GST-free or taxable and the totals of GST-free sales and total sales (section 6(1)(g)). An upgrade to POS systems, or an operational change where a POS vendor adds the relevant functionality, can change eligibility. A sub-entity that gains such capability becomes ineligible and should not use the simplified method thereafter, but the instrument contains no transitional text about mid-year capability upgrades. The instrument does not state whether the presence of such equipment at certain terminals only disqualifies the whole sub-entity; the wording suggests the sub-entity must not have such equipment at all, but precise operational interpretation may be required.

4. The "mainly sells the food in an unchanged form" requirement (section 6(1)(d)) is factual and may be contested. The instrument does not define "mainly" or "unchanged form." Practitioners must document the nature of food sales (pre-packaged items versus prepared meals) and show that a majority of sales fit the description. Absent a statutory definition, evidentiary records and clear operational descriptions will be needed to support an eligibility claim.

5. Method choice uniformity: once the government entity elects, it must use the same simplified method for all selected sub-entities (section 6(3)). This prevents mixing Method A on some sub-entities and Method B on others within the same government entity. The instrument does not state whether a government entity may elect different methods in different notice periods; the uniformity requirement applies to the set of sub-entities "it has chosen to apply the method to" and would require careful notice drafting if the entity wishes different treatment over time.

This section sets out practical steps,grounded in the instrument’s text,that a government entity should follow if it intends to use one of the simplified accounting methods for sub-entities selling food in prisons and detention institutions.

1. Confirm entity and sub-entity status

• Verify the government entity is a retailer and is registered for GST (sections 6(1)(a)-(b)). The instrument references the Act’s definitions for these terms (section 4 note), so confirm registration and legal character under the Act.

• Identify the relevant organisational units and confirm they meet the instrument’s sub-entity definition: not a separate entity, not registered, and separately identifiable by activity or location (section 4). Document the organisational structure to demonstrate the sub-entity is not a separate legal entity and lacks its own registration.

2. Confirm eligibility criteria for each sub-entity

• Confirm that each candidate sub-entity makes both taxable and GST-free supplies of food at the same premises in the course or furtherance of carrying on the government entity’s enterprise (section 6(1)(c)). Collect sales records or operational descriptions showing mixed supplies at the premises.

• Confirm the sub-entity’s main activity is selling food and it mainly sells food in an unchanged form (section 6(1)(d)). Document product mixes and sales composition to substantiate the "mainly" test.

• Compute the sub-entity’s GST turnover as if it were a separate entity and confirm it does not exceed $2 million (section 6(1)(e)). Produce turnover calculations and supporting sales records for the qualifying period.

• Confirm the sub-entity is located within a prison or an institution where people are lawfully detained (section 6(1)(f)). Maintain site documentation or organisational controls that identify the premises.

• Confirm the sub-entity does not have point-of-sale equipment that can identify and record each separate supply as GST-free or taxable and the totals of GST-free sales and total sales (section 6(1)(g)). If POS machines have been upgraded or replaced, verify capability settings and document the absence of the required functionality.

3. Decide which sub-entities will be included and select the method