SUPPLEMENTARY Explanatory Memorandum
Amendments to be moved on behalf of the Government (Circulated by authority of the Treasurer, the Hon Peter Costello, MP)General outline and financial impact
Amendments to A New Tax System (Goods and Services Tax) Bill 1998
Amendments are made to the A New Tax System (Goods and Services Tax) Bill 1998(GST Bill) to:
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- enable the Commissioner of Taxation (the Commissioner) to determine tax periods other than monthly tax periods in certain cases;
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- allow charitable institutions, trustees of charitable funds and gift-deductible entities to account on a cash basis even if their turnover exceeds the cash accounting turnover threshold;
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- provide that tax invoices are not required for gambling supplies; and
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- provide further clarification of the rules that deal with periodic supplies and acquisitions.
Date of effect : 1 July 2000.
Proposal announced : Not announced.
Financial impact : Negligible.
Compliance cost impact : Nil but expected to decrease costs for taxpayers.
Requests for amendments to A New Tax System (Goods and Services Tax) Bill 1998
Requests for amendments to the GST Bill to:
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- provide that appropriations by an Australian Government Agency are not subject to Goods and Services Tax (GST);
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- ensure transfers to an overseas branch of an entity are treated as GST-free exports;
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- remove the requirement that the supplier notify a debtor that a debt has been written-off and instead provide for adjustments where a debt has been outstanding for 12 months or more;
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- extend GST-free treatment to all supplies of personal care and nursing services by approved providers; limit the GST-free services to residents requiring personal or nursing care; and ensure that GST-free treatment is confined to the type of services covered by the Quality of Care Principles made under section 96-1 of the Aged Care Act 1997 ;
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- extend GST-free treatment to spare parts specifically designed for a medical aid or appliance in Schedule 1 to the GST Bill;
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- ensure that subsequent supplies of second-hand goods by a charity remain GST-free as long as the goods retain their original character;
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- ensure that GST is not imposed on raffles and bingo conducted by charities;
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- enable the GST-free treatment applied to the supply of going concerns to also apply to sales of farm land;
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- provide suppliers of long term accommodation in commercial residential premises the choice of treating their supplies as either input taxed or valued at 50%;
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- extend the grouping provisions to include partnerships and trusts;
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- allow non-resident companies to be part of a GST group and require the representative member to be an Australian resident;
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- clarify the treatment of input taxed supplies between members of GST groups;
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- clarify who is entitled to diesel fuel credits within GST groups and GST joint ventures;
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- clarify the input tax credit treatment for luxury cars;
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- treat strata and similar titles in the same way as freehold interests and long term leases;
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- clarify how GST applies to insurance transactions;
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- allow input tax credits where an entity reimburses expenses incurred by an employee, agent, partner or company officer;
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- allow a full diesel fuel credit for the transport of sugar cane by sugar cane rail transport;
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- include casino rebates in the calculation of the gambling margin so that GST is charged on the correct amount;
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- modify the rules in relation to adjustments for changes in creditable purpose so that no adjustment is necessary in certain circumstances;
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- provide that adjustments for supplies of things used to make supplies are only required in certain circumstances and correct how the adjustment is calculated;
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- limit the application of the anti-avoidance rules, particularly the principal effect test; and
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- clarify that an entity is entitled to input tax credits for creditable acquisitions made from the Government.
Date of effect : 1 July 2000.
Proposal announced : Not announced.
Financial impact : Negligible.
Compliance cost impact : Nil but expected to decrease costs for taxpayers.
Requests for amendments to A New Tax System (Goods and Services Tax Transition) Bill 1998
Requests amendments to the A New Tax System (Goods and Services Tax Transition) Bill 1998 (Transition Bill) to:
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- ensure transitional arrangements cover supplies of rights paid for periodically on or after 1 July 2000;
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- amend the rules that deal with review opportunities;
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- extend the transitional wholesale sales tax (WST) credit for imported second hand goods held for sale or exchange at the start of 1 July 2000;
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- exclude imported second hand goods from the second hand goods transitional arrangements;
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- make provision for insurance claims made after the commencement of the GST legislation and relating to events where the time is uncertain;
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- provide transitional rules that allow a choice to claim input tax credits, in certain circumstances, for premiums paid on insurance policies before 1 July 2003;
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- amend the rate of excise or customs duty used to calculate diesel fuel credits on diesel or like fuel acquired or imported before 1 October 2000; and
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- ensure the reduction in the WST rate from 32% to 22% will apply from 21 days after Royal Assent of the GST Bill.
Date of effect : The requests for amendments will apply from the same date to which the relevant provisions in the Transition Bill will have effect. Generally, this will be 1 July 2000.
Proposal announced : Not announced.
Financial impact : Negligible. The request that relates to the reduction in the WST rate from 32% to 22% is expected to have a small financial impact compared to the Mid-Year Economic and Fiscal Outlook estimates. However, this depends on the time of Royal Assent to the GST Bill.
Compliance cost impact : Negligible.
Amendments to A New Tax System (Goods and Services Tax Administration) Bill 1998
A technical amendment is required to the A New Tax System (Goods and Services Tax Administration) Bill 1998to provide that decisions the Commissioner makes in relation to special tax periods are reviewable GST decisions.
Date of effect : 1 July 2000.
Proposal announced : Not announced.
Financial impact : Nil.
Compliance cost impact : Nil.