Further Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)Chapter 7 - Transitional and Administration
Introduction
7.1 This chapter discusses requests for amendments to the A New Tax System (Goods and Services Tax Transition) Bill 1998.
Progressive or periodic supplies
7.2 Requests 2 to 4 to the Transition Bill replace the previous requests that dealt with progressive or periodic supplies. The following paragraphs replace paragraphs 2.2 to 2.6 of the Supplementary Explanatory Memorandum.
7.3 Section 11 of the Transition Bill provides the transitional rules that apply to supplies made progressively or periodically, such as a lease or a one year maintenance agreement. The government intended that the proportion of the supply made after 1 July 2000 would be subject to GST.
7.4 It is not clear from section 11, as currently drafted, that supplies that are made for a period, rather than made periodically, are covered, as the government intended. Requests 2 to 4 to the Transition Bill request amendments to section 11 so that it more accurately reflects the governments policy. The requests make it clear that section 11 applies to supplies and acquisitions made for a period. This would cover, for example, a supply of a right to use a printing press for a 4 year period.
7.5 Section 11, as currently drafted, also excludes the supply of goods and real property from the operation of the provision. This has the effect that a supply of goods, or a lease of a building, would not be subject to section 11. The general time of supply provisions in section 6 would apply. For example, if goods were supplied for use for a 3 year period and were removed on 30 June 2000, it is not clear whether section 11 as currently drafted applies to the supply. The government intended that such supplies be taxable to the extent they are made after 1 July 2000. As another example, if a 10 year lease of a building was entered into before 1 July 2000 and the building was made available to the recipient before 1 July 2000, section 11 as currently drafted would not apply. The government also intended that such supplies be taxable, to the extent they are made after 1 July 2000.
7.6 The amendments ensure that supplies made for a period, or made progressively over a period are subject to GST to the extent they are made after 1 July 2000. The amendments also make it clear that section 11 applies to leases, hire agreements and similar arrangements.
Review opportunity
7.7 For an explanation of request 5 to the Transition Bill see paragraphs 2.7 to 2.8 of the Supplementary Explanatory Memorandum.
Second hand imported goods
7.8 For an explanation of requests 6 and 7 to the Transition Bill see paragraphs 2.9 to 2.13 of the Supplementary Explanatory Memorandum.
Insurance
7.9 For an explanation of requests 9 to 11 to the Transition Bill see paragraphs 2.14 to 2.18 of the Supplementary Explanatory Memorandum.
Gambling
7.10 Request 12 to the Transition Bill amends Division126 of the Bill to provide for the inclusion of various rebate type payments in the calculation of total monetary prizes. The amendment will ensure that such amounts are not included in total monetary prizes if they relate to a gambling event occurring before 1 July 2000.
Phase down of the 32% sales tax rate
7.11 For an explanation of requests 13 and 14 to the Transition Bill see paragraphs 2.21 and 2.22 of the Supplementary Explanatory Memorandum. Request 15 to the Transition Bill also ensures that the phase down of the 32% sales tax rate will apply from the 21st day following Royal Assent.