Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)

Chapter 7 - Recycled paper

Overview

7.1 Schedule 3 to the Bills removes the sales tax exemption for certain 100% recycled paper products.

Summary of the modifications

Purpose of the modifications

7.2 The modifications will ensure that the general rate of sales tax (currently 21 per cent ) will apply to goods made entirely from recycled paper.

Date of effect

7.3 The modifications will apply to dealings with goods on or after 1 November 1995. [Subclause 2(3) and clause 7 )

Background to the legislation

7.4 Item 108 of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 (the E & C Act) currently exempts recycled printing and writing paper from sales tax provided those goods are made entirely from recycled paper. In September 1993, the Industry Commission released a report entitled 'Adding Further Value to Australia's Forest Products'. The report noted that the use of sales tax exemptions in this case was inefficient and likely to impede efficient industry development and recommended that the sales tax exemption for recycled paper products be abolished.

Explanation of the modifications

7.5 Schedule 3 to the Bills removes the sales tax exemption for 100% recycled paper by omitting Item 108 from Schedule 1 to the E & C Act and by removing the reference to Item 108 from the Table of Contents to Schedule 1. [Items 2 and 1 respectively]