House of Representatives

Explanatory Memorandum

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

Chapter 2 - Arrangements spanning the implementation date

Overview

2.1 The Transition Bill contains rules for determining whether the GST system applies to certain arrangements that span the implementation date. These arrangements include those where:

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part or all of the consideration is paid, or the invoice is issued, prior to 1 July 2000 for a supply which will be made on or after 1 July 2000;

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an arrangement is entered into prior to 1 July 2000 for something to be done on or after 1 July 2000; and

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an agreement provides for supplies to be made on more than one occasion, and those occasions occur both before and on or after 1 July 2000.

2.2 Section 7 provides the general principle that the GST regime applies to all supplies or importations made on or after the implementation date of 1 July 2000. Section 6 provides a time of supply rule for determining when a supply or acquisition of goods, real property, services or any other thing is made, so that supplies can be attributed to a particular tax system.

2.3 The Transition Bill also contains rules for particular types of contracts and supplies, which may vary the general rule for certain types of arrangements.

2.4 The transition provisions also apply to importations.

References

2.5 The information contained in this chapter is set out as follows:

General rules for attributing supplies to a tax system

The general GST transitional rule

2.6 Sections 6 and 8 together provide the basis for a general rule to determine whether supplies or importations that span implementation will fall under the GST system.

2.7 The general GST transitional rule, which applies to transactions spanning the implementation date, can be stated as:

•

any part of a supply, or an importation, made on or after 1 July 2000 will fall for consideration under the GST system; and

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any part of a supply, or an importation, made before 1 July 2000 will not.

2.8 This is so whether or not consideration passed or an invoice was issued prior to 1 July 2000. Section 10

2.9 The effect of sections 6, 8 and 10 is that a supply to be made on or after 1 July 2000 for which any consideration was provided or an invoice was issued before 1 July 2000 is subject to the GST law.

Example

Tickets purchased in April 2000 for a concert to be held in Australia in November 2000 will be subject to GST if the supplier of the ticket is registered or required to be registered.

2.10 The general rule is varied for certain types of agreements or contracts.

Transactions involving more than one type of supply

2.11 Where a transaction involves more than one type of supply (a mixed supply) each type of supply should be considered separately under section 6 .

Example

Under a contract entered into before 1 July 2000 to supply and install a kitchen, the parts are removed to the recipient on 26 June 2000 but the installation is not done until 5 July 2000. The supply of the goods would not be subject to GST (though WST may apply).

If any part of the payment was made or the invoice issued before 1 July, the portion applying to the supply of the installation service would be attributable to the first GST tax period applying to the supplier, if the supplier is registered or required to be registered.

The proportionate value of each supply would need to be determined by the supplier, to apportion the consideration.

Accounting for GST for transactions spanning implementation

2.12 Having determined under which taxing system a transaction (or part) falls, the rules of that system apply to the transaction to determine any liability for taxation, and any entitlement to credits.

2.13 Where a supply or acquisition falls under the GST system, the GST law would normally attribute a taxable supply or creditable acquisition with reference to the tax period in which any part of the consideration is received, or an invoice is issued. For many transactions spanning implementation, the payment or invoicing could occur prior to 1 July 2000.

2.14 Section 10 provides that where any consideration is received or an invoice is issued before 1 July 2000 in connection with a supply which is to be made on or after that day, the consideration or invoice is attributed to the first tax period applying to the supplier on or after 1 July 2000 for GST purposes. This is illustrated in the following diagram.

2.15 Section 10 therefore establishes 1 July 2000 as the start of the first possible tax period in which a liability for GST can arise.

Example

The entity supplying the ticket in the example after paragraph 2.9 above must, if registered or required to be registered, account for the GST payable on consideration received or invoiced prior to 1 July 2000 in its GST return for the first tax period that applies to it on or after 1 July 2000.

2.16 This attribution rule is varied for contracts for progressive or periodic supply of services and of other things other than goods or real property [section 11] and for construction contracts [section 18]. See paragraphs 2.66 and 2.74 of this EM.

Importations

2.17 As the date of entry for home consumption or some other act initiated by Customs crystallises the liability for GST, and for WST, it is not necessary to have a specific time of supply rule for the importation of goods.

2.18 Other acts initiated by Customs include the sale by them of imported goods which are seized and sold, or delivered later, under certain provisions of the Customs Act 1901 . The time of sale or delivery, as appropriate, is taken as the time of importation.

Transactions involving assessable dealings (WST)

2.19 The general transitional rule applies to WST assessable dealings of goods such that any part of a supply made in relation to that dealing before 1 July 2000 falls under the WST system, and any part of a supply made on or after 1 July falls under the GST system.

2.20 Section 8 provides additional rules applying to transactions involving assessable dealings.

2.21 Subsections 8(1) and 8(2) and the time of supply rule effectively mean that no assessable dealing can be made on or after 1 July 2000. This ensures that any part of a supply made before 1 July 2000 is related to an assessable dealing before 1 July 2000, and that no assessable dealings can be taxed after 30 June 2000 under the WST.

All of the supply made before, but assessable dealing after, 1 July 2000

2.22 In general, an assessable dealing relating to a supply or importation made on or after 1 July 2000 will not be subject to sales tax. [Subsection 8(1)]

However, subsection 8(2) provides that

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where the supply of goods is made prior to 1 July 2000; and

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an assessable dealing of those goods is made after 1 July 2000;

the time of the dealing is taken to be immediately before 1 July 2000 and the transaction falls under the WST system.

2.23 Where an assessable dealing after 30 June is brought back to the WST regime, any WST payable in respect of the dealing would be due with the WST return due for the period ending 30 June 2000.

Assessable dealing before, but all of the supply made after, 1 July 2000

2.24 An assessable dealing occurring before 1 July 2000 would normally be subject to the WST system. However, where the supply of goods is actually made on or after 1 July 2000, no WST is payable. The transaction would fall under the GST system. [Subsection 8(1)]

Where supply partly on either side of, but assessable dealing before, 1 July 2000

2.25 Subsection 8(1) provides that no WST is payable on an assessable dealing to the extent that the supply in respect of the dealing is made after 1 July 2000. That part of the supply made on or after 1 July 2000 falls under the GST system. [Subsection 7(1)] The WST system applies to the portion supplied before 1 July 2000.

2.26 The taxable value on which WST is paid will be based on the proportion of the value of the total supply which is made before 1 July 2000.

2.27 Note that if stock on hand at 1 July 2000 includes stock on which WST has been paid, a credit may be available. See paragraphs 3.1 to 3.18 of this EM for details.

2.28 Special rules addressing arrangements spanning the implementation date are dealt with from paragraph 2.31.

Where supply partly on either side of, but assessable dealing after, 1 July 2000

2.29 Where the assessable dealing occurs after 1 July 2000, any portion of the supply that is made before 1 July 2000 would fall under the WST system. [Subsection 8(2)] The time of the dealing is taken to be immediately before 1 July 2000. The portion of the supply made after 1 July 2000 would fall under the GST system.

Example

The kitchen manufacturer in the example at paragraph 2.11 delivers kitchen components on 26 June 2000 and installs it on 5 July 2000. Entitlement to the goods does not pass until 5 July 2000 (this is usually when the assessable dealing occurs). The assessable dealing in relation to the goods is taken to have occurred on 30 June 2000.

2.30 The taxable value on which WST is paid will be based on the proportion of the value of the total supply made before 1 July 2000.

Exceptions to the general rule: agreements spanning implementation

2.31 Variations from the general rule are provided for some agreements entered into prior to 1 July 2000, and which involve supplies to be made after and/or before that date. This includes:

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non-reviewable agreements;

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reviewable agreements;

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rights granted for life;

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funeral agreements entered into before 2 December 1998 (date of introduction of the Transition Bill);

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agreements for periodic or progressive supplies of things other than goods or real property; and

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construction agreements made before 1 July 2000.

Review opportunities

2.32 In order to understand the treatment of contracts under section 12 , you will first need to distinguish between an agreement that has an opportunity for review and one that does not.

2.33 Under subsection 12(5) an agreement is considered to have no opportunity for review if:

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the agreement specifically identifies a supply; and

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the agreement specifically identifies the consideration in money, or a way of working out the consideration in money (for example, by reference to a formula) for that supply; and

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no opportunity has arisen under the agreement after the date of Royal Assent to the Transition Bill or 2 December 1998, as appropriate, but before the supply is made, to vary the consideration or the method for calculating the consideration, or to alter the consideration for the supply in any other way.

Examples of opportunities to review

1. Company A has an agreement to supply steel. The consideration is calculated by a formula that allows for adjustments to reflect exchange rates. This of itself would not cause the agreement to be treated as having a review opportunity.

2. Company B has a similar contract to company A, but Company Bs agreement provides a date upon which both parties could negotiate a change in the consideration, which is broad enough to allow for the GST to be taken into account, or in the quantity to be provided for the same consideration. This agreement would be considered to have an opportunity for review.

Non-reviewable agreements

2.34 Agreements entered into either prior to 2 December 1998 or Royal Assent of the Transition Bill, but under which supplies will be made after 1 July 2000, may contain provisions such that the agreed consideration does not include GST and the consideration cannot be reviewed to take it into account. Such agreements are often called non-reviewable contracts.

2.35 Unless the Transition Bill has provisions to relieve this, GST may be payable on supplies made under the agreement, but the supplier would be unable to pass on the tax.

2.36 If you have an opportunity to review an agreement or otherwise build any GST into the agreed price, you would normally be expected to do so.

2.37 The final date by which a contract can be entered into and receive the benefit of this provision differs on the basis of whether the acquirer of the supplies under the agreement is entitled to input tax credits on the supply.

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If you are entitled to full input tax credits on the acquisitions, agreements you enter into prior to the date of Royal Assent to the Transition Bill can be treated under section 12 .

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If you are not entitled to full input tax credits on the acquisitions, only agreements you entered into prior to 2 December 1998 can be treated under section 12 .

2.38 The reason why those entitled to input tax credits have until Royal Assent to enter contracts that may be treated as GST-free for a period after 1 July 2000 is that the net tax result for these people is nil. The only possible benefit is one of timing.

All of the consideration is paid prior to 2 December 1998

2.39 If an agreement with no opportunity for review is entered into and paid in full prior to 2 December 1998, all the supplies under that agreement will be GST-free. [Subsection 12(3)] It does not matter whether or not the recipient is entitled to input tax credits on the acquisition.

2.40 If the agreement provides for a later review date, even though the consideration is paid in full in respect of its present terms, the supplies under the contract are GST-free only until the review date, even if that is after 1 July 2005. [Subsections 12(2) and 12(3)]

2.41 The concession available under subsection 12(3) is only available when the consideration is paid in full. Issuing of an invoice will not attract the operation of the provision.

Examples

1. A football club supplies a 20 year membership, from 1 January 1998 to 31 December 2017, to Noel. The membership was paid in full ($1,000), but the terms of the membership provide for an adjustment to be made and paid after 10 years, to reflect general price changes. The supply of the membership would be GST-free under subsections 12(2) & (3). The adjustment made 10 years later is the first review opportunity, and any additional charges for supplies to be made after that review opportunity would be subject to GST.

2. Using the earlier example of a concert in November 2000, any tickets purchased and paid for in full before 2 December 1998 would not be subject to GST.

Recipient is entitled to full input tax credit for the acquisition

2.42 If the recipient of the supply is entitled to full input tax credits, any supplies made prior to 1 July 2005, under agreements which are made prior to the date of Royal Assent to the Transition Bill and which provide no opportunity for review, will be GST free. [Subsection 12(2)]

Note: If all of the consideration is paid before 2 December 1998, all of the supplies made under the agreement will be GST-free. [Subsections 12(2) and 12(3)]

2.43 A person making taxable supplies to recipients entitled to full input tax credits under a non-reviewable agreement entered into after the date of Royal Assent will be subject to GST on all supplies made under that agreement. [Subsection 12(1)]

Example

NJC Pty Ltd, is entitled to full input tax credits and has an agreement with the football club for the company to put its advertising banners around the football ground. The agreement, which is for 10 years, was entered into in February 1998 and has no opportunity for review. Consideration is paid annually. Supplies made by the football club prior to 1 July 2005 under the contract are not subject to GST. The consideration for the year commencing February 2005 would be apportioned on a time basis to ascertain the value which would be subject to GST.

Recipient not entitled to full input tax credit for the acquisition

2.44 If the recipient of the supply is not entitled to full input tax credits on its acquisitions (for example, financial institutions and end-consumers), supplies made prior to 1 July 2005 under agreements which are made prior to 2 December 1998 and which provide no opportunity for review, will be GST free. [Subsection 12(2)]

Note: If all of the consideration is paid before 2 December 1998, all of the supplies made under the agreement will be GST-free. [Subsections 12(2) and 12(3)]

Example

Noels wife Margaret signs a contract for a 10 year membership of the football club in October 1998, but she has not paid the full consideration by 2 December 1998. The contract has no provision for a review of the consideration. The supply of the membership would be treated under paragraph 12(2)(a), such that the portion of the membership attributable to the period on or after 1 July 2005 would be subject to GST.

Reviewable and new contracts

2.45 If an agreement provides a review opportunity making it possible to take the GST into account in some way, any supply made under the agreement after that opportunity for review (or 1 July 2005, if that is earlier) is no longer GST-free. [Subsection 12(2)]

2.46 Subsection 12(4) also provides that recipients not entitled to full input tax credits are treated differently to those who are entitled to full input tax credits, for agreements entered into after 2 December 1998.

Recipient entitled to full input tax credit for the acquisition

2.47 Supplies made on or after 1 July 2000 under any agreement entered into after the date of Royal Assent to the Transition Bill will be subject to GST.

2.48 Supplies made on or after 1 July 2000 under a reviewable agreement entered into before the date of Royal Assent to the Transition Bill with a recipient who is entitled to full input tax credits will only be GST-free until the first opportunity to review the consideration or the means to calculate the consideration. [Paragraph 12(2)(b)]

2.49 If the first opportunity for review is on or after 1 July 2005, then only supplies before 1 July 2005 would be GST-free under section 12 .

Example

An accounting firm with offices in the city has an option to renew its lease for another ten years, from December 1998. The accounting firm expects to be registered, and to be entitled to full input tax credits. The landlord and the tenant have the opportunity, before Royal Assent to the Transition Bill, to make the new lease non-reviewable for a set period, or reviewable. If they enter a contract in December 1998 under which the consideration is reviewable after five years, whatever is to be supplied under the lease would be GST-free only until that review date in 2003.

Recipient not entitled to full input tax credit for the acquisition

2.50 Supplies under an agreement entered into prior to 2 December 1998 with a recipient who is not entitled to full input tax credits are only GST-free until the first opportunity to review the consideration or the means to calculate the consideration arises. [Subsection 12(2)]

Once that opportunity passes, any subsequent supplies under the agreement are no longer GST-free.

Example

A financial institution with offices in the city took up its option to renew its lease for another ten years in November 1998. The institution is registered, but is not entitled to full input tax credits. Under the new agreement the consideration is reviewable after five years. Supplies under the lease would only be GST-free until that review date in 2003.

2.51 If the first opportunity to review is on or after 1 July 2005, then only supplies before 1 July 2005 would be GST-free under section 12 .

2.52 A supplier entering a new agreement, or reviewing an existing agreement, after the 2 December 1998 introduction of the Transition Bill, with an entity that is not entitled to full input tax credits on the acquisition under the agreement, should be aware that supplies made by them on or after 1 July 2000 under the agreement will not be GST free.

Right granted prior to 2 December 1998 for life

2.53 An agreement for a right that is granted or exercisable for the rest of an individuals life can be treated in one of three ways, applying the provisions of sections 12 and 13 .

Totally GST-free

2.54 If the agreement for the grant of the right was entered into prior to 2 December 1998, and paid for in full prior to 2 December 1998, the supply is totally GST-free. [Paragraph 13(3)(b)]

GST-free to the extent that consideration is paid before certain dates

2.55 If the agreement for the grant of the right was entered into prior to 2 December 1998 but was not paid for in full before 2 December 1998, the recipient is effectively given until 1 July 2005, or any earlier review date, if one exists, to pay for it.

2.56 Any consideration paid before 1 July 2005, (or an earlier review date if one applies to the agreement) is taken to be for a supply which is GST-free. [Paragraph 13(3)(b)]

Examples

1. Tracey signs a non-reviewable agreement for life membership to a health club in October 1998. She makes the final payment for the membership in February 2002. The supply is GST-free because all the consideration is paid before 1 July 2005.

2. George signs a non-reviewable agreement for life membership to a health club in October 1998 but has only paid part of it ($600) by 1 July 2005. The supply is GST-free to the extent of the consideration paid before 1 July 2005 ($600). Any payments made on or after 1 July 2005 would be taken to be for supplies made after that date and would be subject to GST.

Not GST-free

2.57 If the agreement for the grant of the right is entered into on or after 2 December 1998, all of the consideration for the grant of the right is subject to GST. This would include any supplies made from the date of the agreement to 1 July 2000. [Subsection 13(2)]

2.58 This rule is needed because it is not easy to apportion the supplies under the agreement between those that are subject to GST and those that are not without resorting to actuarial calculations.

2.59 The treatment of a right granted for life is considered at the time the right is granted. The services or other things envisaged as being supplied under this right are those specifically provided for and paid for as part of the agreement. Section 13 does not impact on other transactions the holder of the right may undertake as a result of having the right.

Example

The grant of a life membership of a racing club entitles the holder of the life membership to attend certain functions, and to obtain certain services at a reduced rate. Section 13 is only relevant to the grant of the right itself. Payment to attend the functions, or for the other reduced rate services, would be considered under the other provisions of this Bill and the GST Act.

Funeral agreements entered into prior to 2 December 1998

2.60 Section 14 provides concessional treatment for funeral arrangements entered into before 2 December 1998.

Totally GST-free

2.61 If the funeral agreement was entered into prior to 2 December 1998 and paid for in full prior to 2 December 1998, the supply is totally GST-free. [Paragraph 14(1)(b)]

2.62 Funerals supplied before 1 July 2000 would not be subject to GST.

GST-free to the extent that consideration is paid before certain dates

2.63 If the funeral agreement was entered into prior to 2 December 1998 but was not paid for in full before 2 December 1998, the recipient is effectively given until 1 July 2005, or any earlier review date, if one exists, to pay for it.

2.64 Any consideration paid before 1 July 2005, (or an earlier review date if one applies to the agreement) is taken to be for a supply which is GST-free. [Paragraph 14(b)]

Not GST-free

2.65 If the funeral agreement is entered into on or after 2 December 1998, the supply of the funeral will be subject to GST, if it is supplied on or after 1 July 2000, under the GST law. Section 10 would apply to any payment received or invoice issued prior to 1 July 2000.

Progressive or periodic supplies of services and rights

2.66 Under section 11 if an agreement entered into prior to 1 July 2000 specifically provides for:

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supplies of things (other than goods or real property);

•

on a periodic or progressive basis; and

•

over the period of the agreement and extending after 1 July 2000;

those supplies are taken to be made continuously and uniformly throughout that period. Agreements to which this section applies will always involve the making of more than one supply under the agreement, and it does not matter if those supplies are made at irregular intervals or are of varying value.

2.67 The section only applies where the agreement specifically provides that the supplies are to be made progressively or periodically.

2.68 Section 11 only applies to supplies of services and of things other than goods or real property. A construction contract under which the supplies are to be made on a progressive basis could not be considered under section 11, because the supply is of goods or property.

2.69 The proportion of the supplies made prior to 1 July 2000 under contracts to which section 11 applies, as a time-based proportion of the total supplies under the contract, will not be subject to GST.

2.70 The value of the supplies made on or after 1 July 2000 is brought to account continuously over the term of the contract. In effect this means that the proportion of supplies taken to be made during a tax period of the supplier will be brought to account in that tax period. If the entity has monthly tax periods, then the proportion equivalent to one month would be brought to account.

Examples

1. An enterprise takes out a one year maintenance agreement for its office equipment, effective from 1 April 2000, fully paid for in advance in March 2000 ($1200). The contract is one of periodic supply. Twenty-five per cent of the value of the contract ($400) is taken to be performed before 1 July 2000 and will not be subject to GST. The balance will fall under the GST system, with supplies taken to be made continuously.

The supplier would bring the appropriate proportion of the supplies made to account in each tax period applying to them. If the supplier lodges monthly, GST of one eleventh of $100 is payable each month for the period of the agreement starting on or after 1 July 2000.

2. A one year subscription to a business tax reporting service, spanning the date of implementation, provides, amongst other things, updates of various sizes at irregular intervals, in various forms. The supplies under the contract are taken as being made at regular intervals over the period of the contract for the purposes of the transition arrangements.

2.71 An agreement for periodic or progressive supplies may also be non-reviewable, so the provisions relating to agreements with or without an opportunity for review should also be read. These would override section 11 , in terms of determining whether supplies were GST-free. That is, if a recipient was entitled to receive services GST-free under section 12 , that would still be the case.

2.72 However, section 11 provides the basis for determining the proportion to be attributed to the period before and after 1 July 2000 (or a later date provided by section 12 ) for those agreements under which supplies are subject to GST.

2.73 Supplies made on a continuous basis, such as the provision of power and telephone services, would be taken to be made continuously and uniformly throughout a period under the general transitional rule, based on when the supply is made.

Example

The supply of rental of a telephone line for a three month period, from 1 June to 31 August 2000 is a continuous supply. Two thirds of the value of the supply will be subject to GST under the general transitional rule.

Construction agreements

2.74 Section 18 provides a special rule for attributing the value of certain construction agreements which span implementation. The rule ensures that the value of the project is attributed across the term of the agreement on the basis of the value of the work and materials permanently incorporated in or affixed to the building or site. This effectively breaks the supply of the completed project into two portions that which is not subject to GST and that which is. Division 29 of the GST Act and section 10 of the Transition Bill contain rules about attributing the GST to tax periods.

2.75 The construction agreements to which this section applies are those involving the supply of goods or real property, where the goods or real property being supplied is:

•

the construction, major reconstruction, manufacture or extension of a building, or the construction, major reconstruction, manufacture or extension of a civil engineering work; that is

•

supplied in accordance with a written agreement made before 1 July 2000; and

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the completed project is made available to the recipient on or after 1 July 2000.

2.76 Particular points to note about this provision include:

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the agreement must be in writing; [paragraph 18(1)(a)]

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the supply is the supply of the total construction project itself, as provided for in the agreement, not the components in its creation;

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only the head contractors agreement with the owner of the real property can be considered under this provision. The reason these provisions are restricted to the supply under the agreement between the owner and the head contractor is that subcontractors will charge GST on any supplies that are delivered or performed on or after 1 July 2000 (if they are taxable supplies) and the head contractor can claim input tax credits on the acquisitions;

•

the provision only applies to the extent that you have determined the value of the work and materials permanently incorporated or affixed as at 30 June 2000, in a manner and within the time specified by the Commissioner.

2.77 In the absence of the special rule in section 18 , the total value of the agreement would be subject to GST attributable at the time the goods or property are made available to the recipient, in accordance with section 6 .

2.78 If supplies under a construction agreement would be GST-free under section 12 , which provides a special rule for certain non-reviewable and reviewable agreements, those supplies would continue to be GST-free. However, the value of any part of the supplies under the agreement that is subject to GST should be calculated as provided for in subsection 18(5) .

Calculation of value of supplies attributable before 1 July 2000

2.79 Section 18 only applies to the value of all work and materials permanently incorporated in or affixed on the site of the building or civil engineering work in accordance with the agreement prior to 1 July 2000 (the value added) [subsection 18(2)] , that you determine by an appropriate valuation method. [Subsection 18(4)]

2.80 Subsection 18(5) provides for later valuation, where the supplies are GST-free for a period after 1 July 2000, under the provisions of section 12 . This ensures that the value of supplies made up to the review date or 1 July 2005, whichever comes first, are treated as being GST-free.

2.81 The valuation necessary for the application of this provision must be done on or before the end of the head contractors first tax period after 1 July 2000 (or the first tax period after the date of the later valuation provided by subsection 18(5) ). [Subsection 18(4)]

2.82 If your records make the value of the supplies prior to 1 July 2000 (or later valuation date) clear, that is a sufficient record for the purposes of this section. If not, the Commissioner would accept a valuation by an independent, registered valuer.

2.83 The value added before 1 July 2000 (or the later valuation date) is effectively treated as a supply made prior to that date, and is not subject to GST.

2.84 If the value added is less than the consideration paid or invoiced before 1 July 2000 (or later valuation date), the difference is, in effect, a payment in advance for a supply made on 1 July 2000 (or the later date). That supply would be attributed to a GST tax period under section 10 .

Example (assuming a valid valuation is obtained)

1. An agreement to construct a warehouse is of the type entitled to apply the provisions of section 18 and has a total value of $1 million. It is entered into on 1 January 2000. At the start of 1 July 2000, the value of work and materials permanently incorporated into the construction is $550,000. Consideration invoiced to that time is $650,000. Supplies under the agreement to the value of $550,000 will not be subject to GST. The $100,000 excess consideration would be taken as consideration for supplies occurring after 1 July 2000, and would be attributed to the first tax period commencing on or after 1 July 2000, per section 10 .

Summary of the treatment of certain contracts spanning implementation

The table below summarises the treatment of supplies under various types of contracts which span the implementation date. Columns A,B and C refer to the date on which the contract is entered.