House of Representatives

Explanatory Memorandum

(Circulated by authority of the Acting Minister for Revenue and Financial Services, Senator the Hon Mathias Cormann)

General outline and financial impact

GST and valuable metals

This Bill amends the A New Tax System (Goods and Services Tax) Act 1999 to address exploitation of the goods and services tax (GST) law as it relates to precious metals. The amendments introduce a reverse charge for business to business transactions between suppliers and purchasers of gold, silver and platinum to remove the opportunity for a supplier to avoid paying GST to the Commissioner of Taxation by liquidating. The amendments also clarify the law to ensure that entities cannot exploit the special GST treatment for second-hand goods to claim input tax credits by changing the form of a precious metal they acquire.

Date of effect: These amendments apply in relation to supplies made on or after 1 April 2017.

Proposal announced: These amendments were announced by the Minister for Revenue and Financial Services on 31 March 2017.

Financial impact: This measure is estimated to have an unquantifiable gain to GST revenue over the forward estimates period comprising:

* Unquantifiable

Human rights implications: This Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - paragraphs 1.82 to 1.87.

Compliance cost impact: The amendment imposes some ongoing compliance costs as affected businesses need to determine if relevant supplies should be reverse charged and if input tax credits for acquisitions of second-hand goods are affected.