House of Representatives

Explanatory Memorandum

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

Chapter 7 Technical corrections

Outline of Chapter

7.1 Schedule 7 to this Bill contains a number of minor technical corrections to the GST Act, the A New Tax System (Indirect Tax and Consequential Amendments) Act 1999 , the A New Tax System (Indirect Tax and Consequential Amendments) Act (No. 2) 1999 , the A New Tax System (Tax Administration) Act (No. 2) 2000 , the Indirect Tax Legislation Amendment Act 2000 and the Taxation (Interest on Overpayments and Early Payments) Act 1983 .

Detailed explanation of new law

Amendment to subsection 72-45(2) GST Act

7.2 Subsection 72-40(1) of the GST Act allows an acquisition without consideration from an entity"s associate to be a creditable acquisition if the entity acquires the thing supplied otherwise than solely for a creditable purpose. Subsection 72-45(1) provides that an input tax credit may be claimed on the acquisition from the entity"s associate that is without consideration, to the extent that the acquisition is for a creditable purpose.

7.3 The provisions apply despite the general rule relating to input tax credits on partly creditable acquisitions. This rule is contained in subsection 11-30(3). However, subsection 72-45(2) incorrectly refers to subsection 11-30(2). Item 4 corrects this reference.

Amendment to definition of "recognised professional" in section 195-1 of the GST Act

7.4 The term "recognised professional" is defined in section 195-1 of the GST Act. A person is a recognised professional, in relation to the supply of a service of the kind specified in the table in subsection 38-10(1), if certain conditions are satisfied.

7.5 Paragraph (c) of the definition at section 195-1 is intended to apply to hearing related services. The provision contains an incorrect reference to item 2 in the table at 38-10(1) which lists acupuncture services. The definition should refer to item 3 which lists "audiology, audiometry" services. Item 6 corrects this reference.

Technical correction to section 17-30 of ITAA 1997

7.6 Item 13 ensures the proper application of a definition which was inadvertently omitted, when section 17-30 was originally inserted into the ITAA 1997.

Other amendments

7.7 Item 7 amends the definition of "registered" in section 195-1 of the GST Act to include a reference to the registration of branches. The other amendments correct cross-referencing errors and references to defined terms. [Items 1 to 3, 5, 7 to 12 and 14 to 21]