There are two offences within the category of strict liability offences, being one for a ‘single payment’ and one for a ‘series of payments’. Which means that this limit will apply to the total price of a single supply of goods or services, regardless whether the price is split into a series of payments over time; and the strict liability only applies in relation to the amount of payment(s) and whether or not they are made in cash.
As a result, it must still be shown that an entity must have intended to make or accept a payment in order to have committed either of these offences. Therefore, if an entity inadvertently makes or accepts a payment, without knowing or being aware of what they are doing, then the offence has not been committed. However, once an entity intentionally makes or accepts a payment, the entity commits the offence if the payment includes cash of an amount equal to or exceeding the cash payment limit. This will apply irrespective of whether or not the entity was aware that the payment included this amount of cash.
In addition, for the second offence (‘a series of payments’), an entity must also have intended that the payment is a part of a series of payments made for a supply or made as a gift. Refer to proposed S.12(4) of the Bill and paragraphs 1.42 to 1.43 of the relevant Explanatory Memorandum accompanying the Bill.
Single payment that equals or exceeds the $10,000 cash payment limit
This offence applies if an entity either:
- make a payment to another entity; or
- accepts a payment from another entity
that is or includes an amount of cash that equals or exceeds the $10,000 cash payment limit.
The term ‘payment’ used here is in its broadest sense, referring to any transfer of financial value; and it is not limited to payments that are payments for something, it also includes gifts and loans. Therefore, a payment can include anything from the provision of wages or the payment of goods or services to a donation to a charity. In such scenarios, it is important to use the ordinary meaning of those words when determining whether a payment has been made or accepted by an entity.
Series of payments that equals or exceeds the $10,000 cash payment limit
This offence effectively applies in the same circumstances as above. However, when determining if the cash payment limit has been breached, it is not the payment itself that is assessed, but, rather, it is a series of payments that relate to a single supply (or a single gift) that is assessed. Refer to proposed S.13(1) and S.13(2) of the Bill.
In scenarios where distinct things have been supplied, the mere fact that the payments occur between the same parties would not make it a ‘series of payments’ for these purposes, even if the payments occur on a regular basis. The key distinguishing factor when determining if there has been a ‘series of payments’ for the purposes of the cash payment limit is whether or not the payment(s) relate to a single supply (“any form of supply whatsoever”, as defined in A New Tax System (Goods and Services Tax) Act 1999) or a single gift.
- example – the purchase of a car by instalments (a ‘series of payments’ for the same supply); or, in the context of a gift, a donation has been pledged to a charity to be paid in four instalments annually (each instalment being part of the same committed pledge).
- In contrast, the payment of monthly rent would not ordinarily constitute a ‘series of payments’, primarily because each payment is for the use of the property for a different period, being a separate supply. There is a special rule with regards to periodic supplies to ensure that each monthly payment of rent under an annual lease in this case relates to the supply of the premises for that month over the whole of the period of the lease. Refer to proposed S.10 of the Bill.
Furthermore, it is important to note that payments made for the same supply or gift may form part of a series of payments, even if they are made by different entities.
Mistake of fact defence
Under this defence, a person is not criminally responsible for a strict liability offence where at or before the time of the conduct, they considered whether or not facts existed and were under a mistaken but reasonable belief about those facts, and had those facts existed, the conduct would not have constitute an offence. In other words, if a person honestly and reasonably believed that they were acting lawfully when the offence was committed and that they would not have acted in the way if they knew what they were doing was against the law, they may raise this defence.
The prescribed maximum penalty for each of these offences a fine of 60 penalty units (a penalty unit is currently set at $210, and will be reviewed on 1 July 2020); and it will be increased to five times the amount for a natural person for a corporation, which would be 300 penalty units.
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