Explanatory Memorandum
(Circulated by the authority of the Treasurer the Hon Ralph Willis, M.P.)CHAPTER 16 - SALES TAX - PERIODIC QUOTATION
Overview
16.1 The Bill will amend the Sales Tax Assessment Act 1992 to allow both registered and unregistered persons to supply a single quotation for all their exempt purchases in a period, where that period does not exceed one year. The Bill will also provide for the quotations to be made to both registered and unregistered suppliers.
16.2 To provide purchasers who are permitted to quote for taxable goods, the flexibility to supply a single quotation to each supplier to cover all their purchases for periods up to one year. [Clause 142]
16.3 The amendments apply from the date the Bill receives Royal Assent. [Subclause 2(1)]
Background to the legislation
16.4 The quoting of a registration number or an exemption declaration is a mechanism for exempting an assessable dealing from sales tax. If a purchaser of goods quotes at or before the time of the dealing, the vendor is generally exempted from a sales tax liability on that dealing, and the liability rests with the purchaser.
16.5 In order to reduce the cost of administration involved with quoting, persons who are registered for sales tax purposes can, with the approval of the Commissioner of Taxation, make one quote at the beginning of a month to a supplier to cover all purchases for that month. The quote then applies to all purchases, unless the quoter notifies the supplier that the quoter is not entitled to quote for particular transactions.
16.6 Unregistered persons, such as Government Departments and Public Benevolent Institutions, do not have access to monthly quotations. Further, unregistered suppliers are not able to accept monthly quotations.
Explanation of the amendments
16.7 The amendments will expand the scope of the monthly quoting provisions in section 85 of the Sales Tax Assessment Act 1992 to:
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- extend the period for which quotes may be made from 1 month to 1 year;
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- allow both registered and unregistered persons to supply periodic quotations; and
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- allow both registered and unregistered suppliers to accept periodic quotations. [Clauses 142, 143 and 144]
16.8 The periodic quotation will be required to be in the form and manner approved by the Commissioner of Taxation and be made at or before the time of the first dealing. [Clause 145]
16.9 For the purposes of the new periodic quoting, a monthly quote made before this provision is enacted will be taken to be a periodic quotation. [Clause 146]
What about Commissioner approval?
16.10 There will be no requirement for the purchaser to seek the approval of the Commissioner of Taxation before making use of the provision. This will ensure that business is able to base their periodic quotation decisions around their needs and take into account the needs of their suppliers.
How flexible are the new provisions?
16.11 The new provisions are designed to allow business the maximum flexibility to meet their needs within the bounds of the allowable quoting grounds. It is envisaged that purchasers and suppliers would come to agreement on the period that best suits both their needs and allows for the realities of the business world to be accommodated.
Why is the period limited to one year?
16.12 The limitation reflects the normal maximum period business has indicated is used in most supply contracts. However, the main reason is to ensure that purchasers are able to focus on their responsibilities with respect to quoting and their liabilities on the goods they buy under quotation.