Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 4 - Temporary importation of goods
Overview
4.1 Items 1, 2 and 3 of Schedule 3 to the Bill will amend the Sales Tax Assessment Act 1992 to ensure that goods imported into Australia under a temporary importation exemption, used in Australia, exported and then re-imported are subject to sales tax at the time of the later importation.
Summary of the amendments
4.2 The amendments propose to overcome a deficiency in the sales tax law which allows certain re-imported goods to avoid sales tax.
4.3 Any re-importation of certain goods which occurred after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997. [Item 4]
Background to the legislation
4.4 Wholesale sales tax applies to assessable dealings with goods produced in Australia, or imported into Australia. Goods which have been previously used in Australia are not subject to sales tax.
4.5 The sales tax law allows exemption from sales tax for goods which are imported for short periods. The special temporary importation provisions are intended to cover goods temporarily imported, for example, by a visiting tourist or for an exhibition, promotion or other special event. Under these provisions and the Sales Tax Assessment Regulations, goods can be imported for periods less than twelve months free of sales tax provided a security or undertaking is given and the goods are exempt from customs duty.
4.6 There is evidence that these provisions have been used in an unintended manner. Goods have been imported for a short period under the special temporary importation provisions. After the goods have been returned overseas, they have been re-imported on a permanent basis free of sales tax because they have been previously used in Australia.
Explanation of the amendments
Meaning of Australian-used goods
4.7 New section 9B applies if Australian-used goods were previously brought into Australia on a temporary basis under new section 51A and the goods were exported and later imported. [Item 1]
4.8 The imported goods are not treated as Australian-used goods (and therefore exempt from sales tax) solely because the goods have been applied to own use when previously brought into Australia under the new section 51A . [Item 1] The effect of this provision is that these goods when re-imported may now be subject to sales tax.
Goods imported on temporary basis
4.9 In remedying this deficiency in the law the opportunity has been taken to amalgamate Regulation 10 (goods brought into Australia on a temporary basis) and Regulation 11 (disposal of goods brought into Australia on a temporary basis) and to put those requirements into the primary legislation as new section 51A . This has been done in order to improve the structure of the sales tax law by having the relevant requirements relating to the temporary importation exemption in the primary legislation.
4.10 New subsection 51A(1) provides that no tax is payable on a local entry if all the following conditions are satisfied:
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- subsection 162(1) of the Customs Act 1901 (which deals with goods not formally entered for home consumption) applies to the goods;
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- a Collector of Customs has been given security or an undertaking which satisfies the Collector for the payment of an amount equal to the sales tax which otherwise would have been payable for the dealing;
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- the Collector of Customs has agreed under subsection 162(1) of the Customs Act 1901 for the person to take delivery of the goods; and
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- the relevant regulations made under section 162 are satisfied. [Item 2]
4.11 A security or an undertaking given under new subsection 51A(1) relating to a dealing of goods may be enforced according to its terms if:
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- the goods have been dealt with in a way that does not satisfy new subsection 51A(1) ; or
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- the goods are exported contrary to subregulation 124(3) of the Customs Regulations (which requires that the goods are examined by a Customs Officer and an export entry is made); or
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- the goods are not exported within the time given under subsection 162(3) of the Customs Act 1901 .
If the goods are exported and there is no contravention of these requirements, a security must be returned to the person and an undertaking may not be enforced.
4.12 New subsection 51A(3) provides that no tax is payable on a local entry if all the following conditions are satisfied:
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- subsection 162A(1) of the Customs Act 1901 (which deals with goods that are formally entered for home consumption) applies to the goods;
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- the Chief Executive Officer of Customs has accepted a security or an undertaking for the payment of an equivalent amount of sales tax that would otherwise have been payable for the dealing; and
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- a Collector of Customs has agreed under subsection 162A(2) of the Customs Act 1901 for the person to take delivery of the goods.
4.13 A security or an undertaking given under new subsection 51A(3) relating to a dealing of goods may be enforced according to its terms if:
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- the goods are dealt with in a way that does not comply with subregulation 125B(1) of the Customs Regulations (which restricts what can be done with goods imported under section 162A) without the agreement of the Chief Executive Officer of Customs; or
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- paragraph 162A(5)(a) or (b) of the Customs Act 1901 applies to the goods.
If the goods are exported and there is no contravention of these requirements, a security must be returned to the person and an undertaking may not be enforced.
4.14 New subsection 51A(5) provides that no tax is payable on a local entry if the goods are specified in a valid instrument under subregulation 125A(2) of the Customs Regulations (which deals with goods which are to be used in events of national significance) unless the goods are dealt in a way that does not comply with subregulation 125B(2) of those Regulations.
4.15 In the proposed new section 51A , Collector has its meaning under the Customs Act 1901.
4.16 Item 3 makes a consequential amendment to LE14 of Table 2 in Schedule 1 of the Sales Tax Assessment Act 1992 .
4.17 The amendments apply to the re-importation of certain goods which occurred after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997. [Item 4]