Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 3 - Alcoholic beverages
Outline of Chapter
3.1 Amendment 38 amends the GST Transition Act in relation to transitional credits for alcoholic beverages.
Detailed explanation of the amendments
Special credit for alcoholic beverages
3.2 Section 16 of the GST Transition Act provides a special GST credit for sales tax paid on certain stock held at the start of 1 July 2000. In the case of alcoholic beverages the availability of the credit under section 16 is limited to unopened stocks that are not covered by the WET.
3.3 Sections 16A and 16B operate to reduce the amount of credit available under section 16 by an amount equal to the difference between the new duty amount and the old duty amount where rate of duty will increase from 1 July 2000 or beverages will be subjected to duty for the first time on 1 July 2000.
3.4 Under the current legislation no adjustment is made to the amount of special credit under section 16, where the rate of duty will decrease from 1 July 2000 and the amount of new duty will be less than the old duty amount.
3.5 New section 16AB will operate to increase the section 16 credit by the difference between the old duty and the new duty amount. The amount of special credit available under the amended legislation will be the amount of sales tax paid in respect of the goods plus the difference between old duty and new duty.
Example 3.1
Dianne is a retailer and is registered for GST. She holds stocks of spirit based pre-mix beverages for resale at the start of 1 July 2000. The amount of excise that was included in the price of the beverages was $16.74 and the amount of sales tax was $15.70. The amount of excise that would have been paid if the stock was subject to excise after 1 July 2000 is $14.80. Dianne satisfies the conditions set out in section 16 and would be entitled to claim a special credit of $15.70. Section 16AB will operate to increase the amount of credit that Dianne is entitled to by $1.94 (difference between $16.74 and $14.80). Dianne will be able to claim $15.70 + $1.94 = $17.64 as a section 16 special credit.
3.6 A technical correction is made to paragraph 16B(1)(d) to ensure that this provision operates as intended by replacing the words immediately after 1 July 2000 with at the start of 1 July 2000. [Amendment 39]