House of Representatives

Explanatory Memorandum

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

General outline and financial impact

Exemption for space objects

This measure will exempt from sales tax space launch vehicles, payloads and other goods which are, or are intended to be, launched into or brought back from outer space.

Date of effect: The exemption will apply from the date of Royal Assent.

There will also be a new transitional credit ground to ensure that dealings in relevant space equipment which occur on or after 23 June 1998 and before commencement of the exemption outlined above do not bear sales tax.

Proposal announced: This measure was announced by the Government on 23 June 1998.

Financial Impact: The revenue loss resulting from the exemption of space launch and related equipment is unquantifiable at present. However the sales tax that would otherwise be payable on importing a launch vehicle would be about $60 million.

Compliance cost impact: The compliance costs will be negligible.

Summary of Regulation Impact Statement

Impact: Low

Main Points:

This measure will insert a new exemption item into Chapter 15 (Miscellaneous) of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 . Under this exemption item, the following types of space equipment will be exempt from sales tax:

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space launch vehicles which can, or are intended to be able to, carry a payload into or back from outer space;

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payloads, or other goods, that a launch vehicle is to carry into or back from outer space;

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goods marketed as or for use as parts for any of the goods above; and

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goods for use exclusively as raw materials in constructing or repairing space launch vehicles, payloads or other goods to be carried into or back from outer space.

This measure will also introduce a new transitional credit ground into Table 3A of Schedule 1 to the Sales Tax Assessment Act 1992 . This is to allow relief from sales tax paid on dealings in space equipment which occur on or after 23 June 1998 and before this measure becomes law.

The provision of such relief gives effect to the Governments announcement on 23 June 1998, that from that date satellites, space launch vehicles and associated equipment will not bear sales tax.

Policy Objective:

The policy objective of this measure is to introduce a sales tax exemption for space launch vehicles, payloads and other goods which are, or are intended to be, launched into outer space.

The exemption of these goods from sales tax is intended to:

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facilitate the establishment of a viable commercial space industry in Australia; and

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establish access to the expanding world demand for satellite launch facilities.

Exemption for goods imported by Olympians

The measure will exempt from sales tax certain goods imported by non-Australian members of the Sydney 2000 Olympic and Paralympic Family Members and delegations and participants in the Sydney 2000 Olympics, Paralympic and associated events to give effect to the decision of the Ministerial Committee of the Sydney 2000 Games included in the Committees Minute of 27 August 1997.

Date of effect : From the date of Royal Assent.

Proposal announced : Not yet announced.

Financial impact : Unquantifiable but expected to be low.

Compliance cost impact : The compliance costs will be negligible.

Part 7A goods

The measures correct and strengthen the new sales tax laws implementing a comprehensive scheme for dealing with sales tax evasion in the computer industry.

Date of effect : The corrections to the table in Part 7A of the Sales Tax Assessment Act will apply from the date of introduction of the Bill.

The new penalties will apply from the date of Royal Assent.

The new rules for exported goods will apply from a date to be prescribed.

Proposal announced : Not yet announced.

Financial impact : Unquantifiable revenue gain.

Compliance cost impact : Compliance costs will increase to ensure that only genuine exporters receive the exemptions.

Temporary importation of goods

Amends the Sales Tax Assessment Act 1992 to impose sales tax on re-imported goods that have previously been exempted from sales tax as goods which were imported on a temporary basis and were used in Australia.

Date of effect: After 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997.

Proposal announced: Treasurer's press release No. 52 of 13 May 1997.

Financial impact: Estimated gain in revenue of $2 million per annum from 1997-98 to 2000-2001.

Compliance cost impact: Minimal as the number of taxpayers involved is very small.