House of Representatives

Second Reading Speech

Dr Emerson (Minister for Small Business, Independent Contractors and the Service Economy, Minister Assisting the Finance Minister on Deregulation and Minister for Competition Policy and Consumer Affairs)

I move:

That this bill be now read a second time.

The amendments to this bill implement a number of recommendations made by the Board of Taxation in its recent review of GST administration. The focus of the measures is to reduce GST administration costs and to streamline and remove anomalies in the GST administration framework.

Schedule 1 amends the A New Tax System (Goods and Services Tax) Act 1999, the Fuel Tax Act 2006 and the Taxation Administration Act 1953 to provide that input tax credits and fuel tax credits must be claimed within a four-year period.

In contrast to other indirect tax liabilities and entitlements no effective limitation period currently applies to these credits. The current position is also not consistent with the basic policy underlying the tax law-that is, that taxpayers should generally have certainty about their tax position within a fixed period.

The amendments will result in entitlements to input tax credits ceasing after four years. However, they provide exceptions to the four-year restriction so that, where GST may be borne after four years, taxpayers can potentially also claim associated input tax credits.

The amendments apply to claims for input tax credits made after 7.30 pm Australian Eastern Standard Time on 12 May 2009. This reflects that the amendments implement an integrity measure designed to provide symmetry between the period that taxpayers have a liability for GST on transactions and the period that credits can be claimed. The amendments relating to fuel tax credits will apply from 1 July 2010. This reflects that the Fuel Tax Act 2006 came into operation on 1 July 2006 and therefore the four-year restriction can have no application to fuel tax credits until 1 July 2010.

Schedule 2 amends the A New Tax System (Goods and Services Tax) Act 1999 and the A New Tax System (Wine Equalisation Tax) Act 1999 to extend the Tourist Refund Scheme to allow residents of Australian external territories (such as Norfolk, Cocos (Keeling) and Christmas Islands) to claim refunds of GST or GST and wine equalisation tax for goods separately exported to the external territories. The current rules for goods taken as accompanied baggage will continue to apply.

The amendments made by this schedule apply in relation to goods acquired, and wine purchased, on or after 1 July 2010.

Schedule 3 amends the A New Tax System (Goods and Services Tax) Act 1999 so that intermediaries that facilitate transactions but are not common-law agents will be able to use the simplified accounting provisions of the GST act. These procedures include the ability to issue tax invoices and adjustment notes in their own names.

The amendments will extend these arrangements to other intermediaries, such as billing agents and paying agents. This will lower the compliance costs of intermediaries, principals and third parties. The amendments apply from 1 July 2010.

Schedule 4 amends the A New Tax System (Goods and Services Tax) Act 1999 to clarify how the GST law applies to gambling operators making GST-free supplies, including where the operators accept wagers from entities outside Australia.

The amendments confirm that if a wager is GST-free then the prize money liable to be paid out on that wager will not result in a reduction in the GST payable. The Commissioner of Taxation administers the GST law in this way and the amendment will remove any uncertainty in the current operation of the law. The amendments apply from the first quarterly tax period on or after royal assent.

Schedule 5 amends the A New Tax System (Goods and Services Tax) Act 1999, the A New Tax System (Luxury Car Tax) Act 1999 and the Fuel Tax Act 2006 to specify that overpaid refunds are due and payable from the date of overpayment. These amendments take effect from the start of the first quarterly tax period after royal assent.

Currently, there is inconsistent treatment between those taxpayers who incorrectly determine their liability to pay GST or other indirect taxes and taxpayers who incorrectly determine their entitlement to a refund.

Schedule 6 amends the A New Tax System (Goods and Services Tax) Act 1999 to address anomalous outcomes that may arise as a result of the interaction between various GST provisions in relation to supplies between associates for no consideration. In particular, the current provisions may apply to treat an otherwise input taxed or GST-free supply to an associate, if it had been made for consideration, as a taxable supply where it is made for no consideration. These amendments take effect from the date of royal assent.

Full details of the measures in this bill are contained in the explanatory memorandum.

Debate (on motion by Mrs Mirabella ) adjourned.