House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Treasurer, the Hon Wayne Swan Mp

General outline and financial impact

Adjustments for third party payments

Schedule 1 to this Bill amends the A New Tax System (Goods and Services Tax) Act 1999 to ensure that the appropriate amount of goods and services tax is collected and the appropriate amount of input tax credits claimed in situations where there are payments between parties in a supply chain, which indirectly alter the price paid or received by the parties for the things supplied, but for which an adjustment does not presently arise because the parties are not directly involved in a supply from one to the other.

Date of effect: This measure has effect on and from 1 July 2010.

Proposal announced: The measure was announced in the then Assistant Treasurer's Media Release No. 042 of 12 May 2009.

Financial impact: This measure will have these revenue implications:

Compliance cost impact: Low.

Attribution of input tax credits

Schedule 2 to this Bill amends the A New Tax System (Goods and Services Tax) Act 1999 to clarify that until the expiry of the relevant limitation period, input tax credits may always be claimed in the current tax period.

Date of effect: This measure has effect on and from 1 July 2010.

Proposal announced: This measure was announced in the then Assistant Treasurer's Media Release No. 042 of 12 May 2009.

Financial impact: Negligible. This measure clarifies the interpretation of the law in a manner consistent with current administration.

Compliance cost impact: Negligible. This measure clarifies the interpretation of the law in a manner consistent with current practice.

This measure also has a negligible transitional impact. No changes to existing systems or practice are required.