House of Representatives

Tax Laws Amendment (2010 GST Administration Measures No. 1) Bill 2010

Second Reading Speech

Mr Bowen (Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services)

I move:

That this bill be now read a second time.

This Bill amends the GST law to implement a range of improvements to Australia's tax laws. These amendments arose from recommendations of the Board of Taxation in its review of GST administration.

Schedule 1 ensures that the appropriate GST outcome is achieved in situations where there are payments between parties in a supply chain which indirectly alters the price received or paid for the thing that is supplied.

This is done by creating an adjustment to apply in situations where, for example, a taxpayer supplying things to a retailer for resale makes a monetary payment to an end customer and a third party in the supply chain in connection with the third party's acquisition of the thing.

Views were expressed to the board that it was not appropriate that payments to third parties that impacted on the price of supplies of goods or services did not result in adjustments. The board recommended that the law be amended to ensure that manufacturers' rebates, which in effect change the price of a transaction, result in adjustments for the payer and the third party, reflecting the economic outcome of the transaction.

This amendment ensures that GST adjustments are required in all situations in which consideration is paid by an entity in the supply chain to a third party which effectively alters the consideration paid.

The amendment will apply to third party payments made on or after 1 July 2010.

Schedule 2 clarifies the current rules for attributing input tax credit to tax periods. The GST law is intended to allow taxpayers to attribute unclaimed input tax credits in the current period. This avoids the compliance and administrative costs associated with amending returns for prior periods.

A number of submissions made to the Board of Taxation expressed concerns that the application of the current law was ambiguous in particular circumstances. The board recommended that the law be amended to remove any doubt that it applies as intended.

The amendment clarifies the GST law by confirming that the rule allowing attribution in the current period applies to all input tax credits. This is consistent with the ATO's current administration of GST law.

The amendment applies to net amounts in tax periods commencing on or after 1 July 2010.

Full details of the amendments in this bill are contained in the explanatory memorandum.

Debate (on motion by Mrs Gash ) adjourned.