Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)Outline of the sales tax legislation package for the 1995-96 Budget
The changes to the sales tax law announced in the 1995-96 Budget are contained in four separate Bills.
Taxation Laws Amendment (Budget Measures) Bill 1995
As well as amending the Income Tax Assessment Act 1936, this Bill will make amendments necessary to give effect to the following sales tax measures:
- •
- amendments to remove concessions for certain computer programs on non-permanent microchips;
- •
- amendments consequential upon the increase in tax rates for passenger motor vehicles; and
- •
- amendments affecting the liability of the Commonwealth to pay sales tax refunds.
These amendments are explained in greater detail in the explanatory memorandum for the Taxation Laws Amendment (Budget Measures) Bill 1995.
Sales Tax (Exemptions and Classifications) Modification (Excise) Bill 1995
Sales Tax (Exemptions and Classifications) Modification (Customs) Bill 1995
Sales Tax (Exemptions and Classifications) Modification (General) Bill 1995
These Bills will modify the operation of the Sales Tax (Exemptions and Classifications) Act 1992 (E & C Act), as modified by any other Act, to the extent necessary to give effect to the changes briefly described below:
- •
- scaffolding, wall and floor safes and racking and shelving systems excluded from exemption;
- •
- safes, musical instruments and bric-a-brac excluded from concessional treatment;
- •
- rate of tax on passenger motor vehicles increased;
- •
- certain currently exempt building materials and other goods to be subject to tax;
- •
- model aircraft excluded from exemption; and
- •
- exemptions for recycled paper removed.
These measures are set out in the Schedules to the Bills. The Schedules are identical for each Bill. Consequently, references throughout this explanatory memorandum to particular items or Schedules should be read as being a reference to the relevant item or Schedule in each of the Bills. The Constitution requires that a law imposing taxation should only deal with one subject of taxation. Sales tax is therefore imposed by 4 Acts, the Sales Tax Imposition Acts. There are separate Acts imposing sales tax to the extent that it is a duty of customs, a duty of excise, a tax on in situ swimming pools, or a tax that is none of these. The Constitution also requires that a law imposing taxation should only deal with that imposition, and a part of the law relating to any other matter will be invalid.
There is a view (although not shared by the Government) that the measures contained in the Modification Bills impose taxation. For this reason, they have been included in separate Bills. Each Bill will modify the effect of the Exemptions and Classifications Act in so far as it applies to sales tax imposed by the corresponding Sales Tax Imposition Act.
The Modification Bills modify the effect or operation of the E & C Act, but do not amend it. It will therefore be necessary to read the Exemptions and Classifications Act together with earlier modifying Acts, and these Modification Bills, to discover how the sales tax laws are to be applied in relation to the goods affected by these measures.
The changes to the sales tax law contained in the Modification Bills are explained in greater detail below.