Supplementary Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Reverse charge and expatriate salaries
The A New Tax System (Goods and Services Tax) Act 1999 (GST Act) is amended to remove the GST reverse charge from amounts paid to an overseas entity or branch by its Australian branch for the services of an expatriate employee. The reverse charge is removed from the payment to the extent that the amount would have been subject to pay as you go (PAYG) withholding if it had been paid to a worker in Australia by an Australian employer.
Date of effect: 1 July 2000.
Proposal announced: Not announced.
Financial impact: Negligible.
Compliance cost impact: The request for amendment will reduce compliance costs for foreign owned financial supply providers.
Fringe benefits tax interaction
The requests for amendments make technical corrections to the provisions in the Indirect Tax Legislation Amendment Bill 2000 relating to the interaction of fringe benefits tax (FBT) and GST. The current provisions are too broad and should not operate to deny a financial supply provider an input tax credit on an acquisition where no FBT would be payable. The amendment will ensure that financial supply providers are not denied an input tax credit on an acquisition or importation where no FBT is payable and only on those acquisitions that are provided as fringe benefits.
Date of effect: 1 July 2000.
Proposal announced: Not announced.
Financial impact: Nil.
Compliance cost impact: The amendments will reduce compliance costs.