House of Representatives

Indirect Tax Legislation Amendment Bill 2000

Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

General outline and financial impact

Non-profit bodies

Amendments 2 and 5 to 25 amend the GST Act to:

·
provide government schools with the same GST concessions as charities, including non-government schools;
·
remove the requirement that all supplies made through a school tuckshop or canteen must be supplies of food, in order for a non-profit body to be able to choose to treat all of its supplies of food as input taxed; and
·
provide charitable bodies that belong to the same religious organisation the ability to eliminate internal transactions within their religious organisation for GST purposes.

Date of effect: 1 July 2000.

Proposal announced: Not announced.

Financial impact: Negligible.

Compliance cost impact: Negligible.

Producer rebates under the WET

Amendment 36 inserts new Schedule 9A to the Bill which amends the WET Act to provide for a rebate of WET for certain cellar door and mail order sales made by small wine producers.

Date of effect: 1 July 2000.

Proposal announced: Assistant Treasurer's Press Release No. 17 of 11 April 2000.

Financial impact: $46 million for the 3 years commencing 1 July 2000.

Compliance cost impact: Minimal, claims will be made at the same time and in the same manner in which wine tax is payable.

Summary of regulation impact statement

Regulation impact on business

Impact: Low.

Main point: This measure will have minimal impact on the compliance costs of affected businesses which already claim similar assistance from the states.

Policy objective: The Government's policy objective is to assist winemakers who make retail sales directly to unlicensed people from the cellar door or via mail order and the Internet, and who use their product in application to own use.

Alcoholic beverages

Amendment 38 amends the GST Transition Act to allow an additional GST special credit for certain alcoholic beverages held for resale at the start of 1 July 2000 where the rate of duty on the product will decrease.

Amendment 39 is a technical correction to section 16B of the GST Transition Act.

Date of effect: 1 July 2000.

Proposal announced: Not announced.

Financial impact: Nil.

Compliance cost impact: Negligible.

Other amendments

There are various amendments to the GST Act that will:

·
clarify the GST treatment of goods sold through inwards duty free shops [amendments 26 and 27] ;
·
make some technical corrections to the Bill relating to supplies involving non-residents [amendments 28 and 29] ;
·
deny input tax credits for goods and services acquired or imported for the purpose of providing fringe benefits to employees of a financial supplier that is wholly or partially denied input tax credits on its acquisitions [amendments 30, 33 to 35] ;
·
technical corrections to the Bill for borrowing related importations [amendments 31 and 32] ;
·
further clarify the application of GST to supplies made by entities to their members and provide that partnerships, the members of which are principally individuals, are not carrying on an enterprise if they do not have a reasonable expectation of profit or gain [amendments 42 and 43] ;
·
ensure that complying superannuation funds are carrying on an enterprise for GST purposes [amendment 43] ;
·
clarify the calculation of GST for a mixed supply [amendment 44] ;
·
technical correction to the Bill relating to the supply of real property by way of long-term lease [amendment 49] ;
·
ensure that goods that have entered Australia under temporary importation provisions are subject to GST if reimported [amendments 50 and 51] ;
·
ensure that input tax credits can only be claimed once by a partnership in respect of partner reimbursements [amendment 52] ;
·
enable employers to claim input tax credits where they pay an expense on behalf of an employee and that expense is related to that person's activities as an employee [amendment 53] ;
·
ensure that an entity that enters goods for home consumption but is not the importer of the goods can claim input tax credits in respect of the taxable importation [amendments 45, 54 and 55] ; and
·
ensure that the rules which provide for an increasing adjustment where things are taken out of the GST system will not disadvantage executors and beneficiaries of deceased estates who continue to carry on an enterprise of the deceased [amendments 56 to 60] .

In addition, there are amendments to the ABN Act, the GST Transition Act and the LCT Act that:

·
amend the ABN Act to further clarify the application of the ABN to entities that only make supplies to their members and provide that partnerships, the members of which are principally individuals, are not carrying on an enterprise if they do not have a reasonable expectation of profit or gain [amendment 41] ;
·
amend the GST Transition Act to clarify the application of the phasing in of input tax credits for acquisitions of motor vehicles and where motor vehicles are the subject of an eligible short term lease [amendments 61 and 62] ; and
·
amend the LCT Act to ensure that the luxury car tax applies to all campervans and motor homes with a value above the LCT threshold [amendment 63] .

Date of effect: Various.

Proposal announced: Not announced.

Financial impact: Negligible.

Compliance cost impact: Some amendments will have no impact on compliance costs while others will reduce compliance costs.

Customs Act 1901

The amendments to the Customs Actclarify the position in relation to customs duty on non-commercial low value postal importations and ensure that GST will be payable on the importations. The amendments fix the time when the rate of import duty is calculated for such goods and the time when import duty must be paid [amendments 64 to 66] .

Date of effect: 1 July 2000.

Proposal announced: Not previously announced.

Financial impact: Nil.

Compliance cost impact: Nil.

Trading after midnight on 30 June 2000

Schedule 10A to this Bill amends the GST Transition Act and related Acts to permit businesses which trade over midnight 30 June 2000 and into 1 July 2000 to choose to continue to trade on a pre-GST basis until the earlier of:

·
6.00 am on 1 July 2000;
·
close of business; or
·
an earlier time that the business chooses.

The amendment ensures that sales tax continues to apply if a business chooses to adopt a transition trading period.

Date of effect: The amendments will apply from 1 July 2000.

Proposal announced: This measure has not been announced.

Financial impact: The measures are expected to have a small but unquantifiable financial impact.

Compliance cost impact: The measure will reduce compliance costs for affected businesses.


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