Under the new GST – Time of Supply Rules effective Jan 1, 2011, there is no more prospective and retrospective test that we used to do.
Under the new law, the time of supply for most transactions will be triggered by the earlier of the following two events:-
a) when payment in respect of the supply is received; and
b) when invoice in respect of the supply is issued.
Consequently the rules to determine when a business need to register for GST would have to change too.
Suppose Company performed and completed only 2 transactions in the year 2011. Each transaction is $600,000.
One transaction has been invoiced and paid. The other transaction, while completed, has NOT been invoiced nor paid as at Dec 31, 2011.
The value of supply made in 2011 under the new rules is only $600,000/-. Therefore company’s liability to register has not yet arisen on Jan 1, 2012.