House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon. P.J. Keating, M.P.)

GENERAL OUTLINE

Sales Tax (Exemptions and Classifications) Amendment Bill 1988

This Bill will amend the Sales Tax (Exemptions and Classifications) Act 1935 -

•

to tax at the 20% rate currently exempt beer with an alcohol content of more than 1.15% by volume;

•

to tax at the 20% rate currently exempt plastic envelopes, courier type bags and goods used by retailers to wrap up or secure goods for marketing or delivery;

•

to increase from 10% to 20% the rate of sales tax on wrapping materials marketed for household use;

•

to tax at the 10% rate currently exempt:

• .

containers used by retailers in marketing take-away foodstuffs,

• .

mixes marketed for use in the manufacture of thick shakes and ice creams,

• .

muesli bars and other health food bars;

•

to ensure that packaged coffee, chocolate and malt flavoured milk drinks that contain less than 95 per cent milk are subject to tax at the rate of 20%;

•

to reduce from 30% to 20% the rate of sales tax on:

• .

photographs and photographic materials,

• .

toiletries, perfumes and cosmetics;

•

to exempt from tax all aircraft except gliders, (at present aircraft are either exempt if used for business purposes or taxable at the 20% rate);

•

to exempt from tax food for fish and crustaceans farmed for commercial purposes currently taxable at the 20% rate;

•

to exempt from tax plain soy milk currently taxable at the 20% rate; and

•

to reduce from 20% to 10% the rate of sales tax on flavoured soy milk.

Sales Tax Assessment (No.1) Amendment Act 1988

This Bill will amend the Sales Tax Assessment Act (No.1) 1930 -

•

to amend the sale value provisions so that where a manufacturer sells goods only by retail or only retails goods through an agent, the sale value, for tax purposes, is based on the manufacturer's own costs and profit and not, as is currently the case, the price charged by another manufacturer selling identical goods by wholesale.