Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2008-2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Tax Laws Amendment (2010 GST Administration Measures No. 3) Bill 2010
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Treasurer, the Hon Wayne Swan MP)
Table of contents
Glossary 1
General outline and financial impact 3
Chapter 1 GST and cross-border transport supplies 5
Chapter 2 GST relief for telecommunication supplies for global roaming
in Australia 19
Chapter 3 GST amendments to third party payment adjustment provisions
29
Index 35
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
|Abbreviation |Definition |
|GST |goods and services tax |
|GST Act |A New Tax System (Goods and |
| |Services Tax) Act 1999 |
|Melbourne Agreement |International |
| |Telecommunication Regulation |
| |(Melbourne, 9 December 1988) |
General outline and financial impact
GST and cross-border transport supplies
Schedule 1 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 to:
. shift the liability to pay goods and services tax (GST) on
the Australian transport leg of the international
transport of imported goods from transport service
suppliers to the importer of the goods in some situations.
This reduces compliance costs for Australian transporters
and non-residents;
. make the GST treatment of exports of postal and
containerised non-postal goods more consistent and reduce
GST compliance costs for transporters; and
. make subcontracted Australian transport services that form
part of the Australian leg of an outbound or inbound
international transport service GST-free when made to a
non-resident not in Australia. This reduces compliance
costs for Australian transporters and non-residents.
Date of effect: These amendments apply on and from 1 July 2010.
Proposal announced: This measure was announced in the then
Assistant Treasurer and Minister for Competition Policy and
Consumer Affairs' Media Release No. 048 of 12 May 2009.
Financial impact: This measure will have the following revenue
implications:
| |2010-11 |2011-12 |2012-13 |2013-14 |
|Impact on |-$2m |-$2m |-$2m |-$2m |
|GST | | | | |
|revenue | | | | |
Compliance cost impact: Low.
GST relief for telecommunications supplies for global roaming in Australia
Schedule 2 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 to ensure telecommunication supplies
provided under global roaming arrangements provided to visitors to
Australia remain not subject to goods and services tax (GST),
consistent with Australia's treaty obligations under the
International Telecommunication Regulations (Melbourne Agreement).
Date of effect: This measure applies retrospectively from
1 July 2000, the commencement date of the GST. This measure does
not adversely affect taxpayers. Retrospectivity benefits suppliers
as the amendment is consistent with the existing industry practice
of not applying GST to these supplies.
Proposal announced: This measure was announced in the Treasurer
and the then Assistant Treasurer and Minister for Competition
Policy and Consumer Affairs' Joint Media Release No. 053 of 13 May
2008.
Financial impact: Nil.
Compliance cost impact: Low.
GST amendments to third party payment adjustment provisions
Schedule 3 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 to ensure the third party payment adjustment
provisions operate appropriately irrespective of whether relevant
parties in the supply chain are members of the same goods and
services tax (GST) group, GST religious group or GST joint venture.
Date of effect: 1 July 2010.
Proposal announced: This measure has not been previously
announced.
Financial impact: Nil.
Compliance cost impact: Low.
Chapter 1
GST and cross-border transport supplies
Outline of chapter
1. Schedule 1 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 (GST Act) to:
. shift the liability to pay goods and services tax (GST) on
the Australian transport leg of the international
transport of imported goods from transport service
suppliers to the importer of the goods in some situations.
This reduces compliance costs for Australian transporters
and non-residents;
. make the GST treatment of exports of postal and
containerised non-postal goods more consistent and reduce
GST compliance costs for transporters; and
. make subcontracted Australian transport services that form
part of the Australian leg of an outbound or inbound
international transport service GST-free when made to a
non-resident not in Australia. This reduces compliance
costs for Australian transporters and non-residents.
Context of amendments
GST treatment of the inbound transportation of goods
2. Under the current law, the supply of transport services for goods
transported from overseas to Australia by transport providers is
GST-free up to the 'place of consignment' (the port or airport of
final destination). However, the Australian leg of the inbound
transport of goods from the 'place of consignment' is taxable for
both prime transport providers and subcontractors.
3. The inbound international transport of goods is generally supplied
by a prime contractor that contracts to provide the whole of the
international transport to the 'place of consignment', including,
where supplied, the Australian leg. If the prime contractor is a
non-resident, the Australian leg of the transport services would in
most cases be subcontracted to an Australian transporter.
4. The GST law currently has a different meaning for the place of
consignment for postal and non-postal goods. As a result, for
postal goods, GST-free treatment applies for international
transport services up to the place where the goods are addressed in
Australia. In contrast, for non-postal goods, GST-free treatment
for such transport services only applies up to the port or airport
of final destination in Australia (item 5 in the table in section
38-355 of the GST Act).
5. The different treatment for postal and non-postal items results in
distortions between the two forms of supplies. In addition, non-
resident transporters without a presence in Australia that
transport non-postal goods within Australia using resident
subcontractors need to register for GST to obtain input tax
credits. As a consequence they become liable for GST on their
supplies that are done in Australia. If such non-residents do not
register for GST then any GST included in the price of their
subcontracted services will be embedded in the cost of services
they provide, resulting in the cascading of the GST.
GST treatment of the outbound transportation of goods
6. Under the current law the international and Australian legs of an
outbound international transport service provided by the prime
transport supplier is generally GST-free from the place of
containerisation (see below) of the goods, where the supplier
undertakes both legs of the transport service (item 5 in the table
in section 38-355 of the GST Act). In contrast, that part of the
transport service from the exporter's address to the point where
the goods are packed in a shipping container (containerisation) is
taxable, except in specific circumstances. For example, the pre-
containerised leg can be GST-free for the prime contractor, as well
as another transport supplier if the supplier of the transport
knows that the Australian leg of transport is being provided to
another entity outside of Australia, such as the recipient of the
goods under an export sales contract. In these circumstances, the
Commissioner of Taxation currently treats the Australian leg of the
transport of the goods from their place of origin in Australia to
their last place in Australia before export as GST-free. This
reflects the operation of item 3 of subsection 38-190(1) and the
application of subsection 38-190(4) of the GST Act.
7. The current law causes difficulties for Australian transport
subcontractors in establishing the correct GST treatment and
imposes compliance costs when they transport mixed loads, with some
goods qualifying for GST-free treatment and some being subject to
GST. The current law also does not always allow the Australian leg
of transport services supplied to non-residents for the export of
goods from Australia to be GST-free, with the result that embedded
GST is incurred by non-residents that do not register for GST.
8. In the 2009-10 Budget, the Government announced that it would amend
the GST law to reduce GST compliance costs for businesses involved
in the Australian leg of international transport of exported and
imported goods, with effect from 1 July 2010.
9. The purpose of these amendments is to provide certainty for
industry and reduce the number of non-resident entities without a
presence in Australia being liable for GST or incurring GST on
their acquisitions that is likely to cascade through the supply of
any goods or services they make.
Summary of new law
10. These amendments to the GST law make the transport of goods by
transport subcontractors within Australia, that forms part of the
international transport of those goods by another entity to
Australia, GST-free in specific circumstances. Supplies of
international transport services are treated as GST-free where they
are made to a non-resident that is not in Australia. However, the
supply is subject to GST if it is made to a resident or a non-
resident that is in Australia. This reduces compliance costs for
Australian transporters and affected non-residents.
11. These amendments also make the transport of goods by subcontractors
within Australia, that forms part of the international transport of
those goods by another entity from Australia, GST-free where the
supply is made to a non-resident that is not in Australia.
However, the supply is subject to GST if it is made to a resident
or a non-resident that is in Australia. This reduces compliance
costs for Australian transporters and affected non-residents.
12. The amendments to the GST law also expand the scope of GST-free
supplies of international transport made under an agreement that
brings the goods to or from Australia. This is done by:
. for exported non-postal goods, extending GST-free
treatment to the last point of collection of goods prior
to containerisation ('place of export') under the
agreement that takes the goods out of Australia; and
. for imported non-postal goods, extending GST-free
treatment to the place of delivery of those goods as
determined under the primary agreement (see paragraphs
1.18 and 1.19) for the international transport of the
goods to Australia ('place of consignment'). For the
international transport of goods to Australia that are not
under a transport or supply of goods agreement, the 'place
of consignment' is unchanged, for example, self transport.
13. In certain circumstances, the liability for GST on the Australian
leg of the international transport of imported goods is shifted
from transport service suppliers to the importer of the goods.
This is achieved by adding the importer's cost from the primary
agreement for the Australian leg of the international transport of
those goods to the 'value of the taxable importation' used to
calculate the GST liability on importation.
14. The amendments also provide GST-free treatment for loading,
handling and other services (including customs clearance services)
in certain circumstances that facilitate the international
transport of goods. However, these other services will not be GST-
free if they are done to facilitate the transport of goods that is
performed after the place of consignment or prior to the 'place of
export'.
Comparison of key features of the new law and current law
|New law |Current law |
|Importations: GST |Importations: GST |
|treatment of the |treatment of the |
|Australian leg of |Australian leg of |
|international transport |international transport |
|services |services |
|The international |The international |
|transport of goods by the|transport of goods by the|
|supplier that brings the |supplier that brings the |
|goods to Australia is a |goods to Australia |
|GST-free supply to the |(excluding loading and |
|place that the supplier |handling that forms part |
|delivers the goods in |of that transport) is |
|Australia under the |GST-free up to the port |
|primary agreement (see |or airport of final |
|paragraphs 1.18 and |destination for |
|1.19). |non-postal goods and to |
| |the place the goods are |
| |addressed for postal |
| |goods. For non-postal |
| |goods, the part of the |
| |supply within Australia |
| |beyond the port or |
| |airport of final |
| |destination by that |
| |supplier is taxable even |
| |when supplied by or to a |
| |non-resident. |
| | |
|The transport of goods by|The transport of goods |
|transport subcontractors |made by transport |
|within Australia that |subcontractors within |
|forms part of the |Australia that forms part|
|international transport |of the transport of goods|
|of goods by another |by another entity to |
|entity to Australia is |Australia is taxable |
|also GST-free if made to |(irrespective of whether |
|a non-resident that is |the supplies are made to |
|not in Australia. Such |a non-resident that is |
|supplies however, are |not in Australia). |
|subject to GST if made to|The value of the |
|a resident or a |international transport |
|non-resident that is in |supply to the port or |
|Australia. |airport of final |
|The value of the |destination in Australia |
|international transport |is included in the |
|supply to the place of |calculation of the value |
|delivery in Australia, as|of taxable importations. |
|determined under the | |
|primary agreement that | |
|brings the goods to | |
|Australia, is included in| |
|the value of taxable | |
|importations. | |
|Exports: GST treatment |Exports: GST treatment |
|of the Australian leg of |of the Australian leg of |
|international transport |international transport |
|services |services |
|The international |For the prime transport |
|transport of |provider, the |
|containerised goods out |international and |
|of Australia by the prime|Australian legs of an |
|transport supplier is |outbound international |
|GST-free from the last |transport service from |
|place the goods are |the place of |
|collected prior to |containerisation (place |
|containerisation (place |of export) of the goods |
|of export) until the |is GST-free where it |
|place of delivery |undertakes both legs of |
|overseas. |transport (item 5 of |
|The transport of goods |section 38-355 of the |
|made by transport |GST Act). |
|subcontractors within |In contrast, that part of|
|Australia that forms part|the transport service |
|of the international |from the address of the |
|transport of those goods |exporter to the point |
|by another entity from |where the goods are |
|Australia is GST-free |containerised is taxable,|
|from the last point of |except in specific |
|collection prior to |circumstances, in which |
|containerisation where |case part of the |
|the supply is made to a |transport supply is |
|non-resident that is not |GST-free under item 3 in |
|in Australia. However, |the table in subsection |
|this supply is subject to|38-190(1) of the GST Act.|
|GST if made to a resident| |
|or a non-resident that is| |
|in Australia. | |
|'Place of export' of |'Place of export' of |
|non-postal goods |non-postal goods |
|The place of export for |The place of export for |
|non-postal goods that are|non-postal goods that are|
|packed in a freight |packed in a freight |
|container is: |container is the place |
|the last place from which|they were packed. |
|they were collected, or | |
|to which they were | |
|delivered, prior to being| |
|packed; or | |
|the place of packing in | |
|the freight container if | |
|the goods were produced | |
|at that place. | |
|'Place of consignment' of|'Place of consignment' of|
|non-postal goods |non-postal goods |
|The place of consignment |The place of consignment |
|for non-postal goods is |for non-postal goods is |
|the place in Australia to|the port or airport of |
|which the goods are |final destination. |
|delivered as determined | |
|under the primary | |
|agreement (see | |
|paragraphs 1.18 and 1.19)| |
|for the international | |
|transport of the goods to| |
|Australia. | |
|Loading, handling and |Loading, handling and |
|other services |other services |
|Loading, handling and |Loading, handling and |
|other services that |other services that |
|facilitate the |facilitate the |
|international transport |international transport |
|of goods for export or |of goods imported to |
|import are GST-free when |Australia are generally |
|supplied to a |taxable. |
|non-resident not in |Loading and handling that|
|Australia or by the |forms part of the |
|primary contractor that |international transport |
|takes the goods to or |of goods exported from |
|from Australia. |Australia are |
| |GST-free. |
Detailed explanation of new law
Australian transport supply leg of an importation
15. The transport of goods within Australia that forms part of the
international transport of those goods by another entity to
Australia is GST-free where the supply is made to a non-resident
that is not in Australia. The supply remains taxable if it is made
to a resident or non-resident that is in Australia[1]. The supply
of the international transport from outside of Australia to the
port or airport of final destination in Australia continues to be
GST-free but GST-free treatment may extend beyond this point if the
place of consignment includes any further leg of Australian
transport. [Schedule 1, item 9, subsection 38-355(2)]
16. The cost of the Australian leg of international transport made by
the primary transport supplier and other relevant services are
included in the value of taxable importations by the following
means:
. the services that facilitate the international transport
of goods and loading and handling, that are not already
reflected in the cost of international transport or the
customs value of the goods, are included in the value of
taxable importations [Schedule 1, item 1, paragraph 13-
20(2)(ba)]; and
. the value of taxable importations includes the amount paid
or payable for the international transport of goods to
their place of consignment in Australia under the primary
agreement (see paragraphs 1.18 to 1.19). The 'place of
consignment' for non-postal items is extended to the place
to which the goods are delivered under the primary
agreement for the international transport of the goods
[Schedule 1, item 13, definition of 'place of consignment'
in section 195-1].
17. The inclusion of the amount paid or payable for certain Australian
legs of international transport in the value of taxable
importations results in GST on the Australian transport of imported
goods being collected at a single point at the border. This
approach avoids the need to impose the GST potentially at multiple
points in a chain of supplies which involve both resident and non-
resident entities. Removing the liability for some non-residents
to pay GST will help to prevent embedded tax for prime transport
providers who are not registered for GST.
18. The primary agreement for the importation of goods refers to the
agreement under which goods are delivered into Australia under the
contract for the supply of the goods or where a local entity brings
the goods to Australia, the primary agreement is the agreement for
the transport of the goods to Australia.
19. If goods from outside Australia are supplied to a local purchaser
on 'delivered duty paid', 'delivered duty unpaid' or under 'cost,
insurance and freight' terms, the primary agreement will be the
supply agreement for the sale of the goods to the local purchaser.
In contrast, the primary agreement under terms of trade involving
'free on board' will generally be the agreement between a transport
company and a local importer in which the goods are transported
from a foreign port or airport to the local importer. [Schedule 1,
item 13, definition of 'place of consignment' in section 195-1]
20. The place where an Australian transport supplier delivers goods in
Australia is the place of consignment for inbound goods from
overseas if they can show that this is the final place in Australia
to which the goods are required to be transported under the
contract or arrangement for the international transport of the
goods.
Example 1.1: A non-resident seller agrees to deliver goods to
Australia
A Swiss bicycle store sells and agrees to deliver several
bicycle frames to a buyer in Horsham, Victoria. Global
Transporters, a non-resident that has no presence in
Australia, is contracted by the Swiss seller to transport
the frames to Horsham, which is the place of consignment.
The services that are performed within Australia are
subcontracted by Global Transporters to Freight Forwarder.
Under the new definition of place of consignment in section
195-1 of the GST Act, the supply by Global Transporters of
transport of the frames from Melbourne to Horsham is GST-
free as:
. Horsham is the place of consignment for the purposes of the
international transport of the frames; and
. Global Transporters contracts with the Swiss seller to
provide both the international and the Australian leg of the
transport to Horsham.
The transport supply by Freight Forwarder to Global
Transporters is GST-free as the supply forms part of the
international transport of the frames and is made to a non-
resident who is not in Australia when the supply of the
transport is done.
Example 1.2: A resident buyer takes delivery of goods outside
Australia
An Australian market store holder, Susan, purchases a
shipment of imitation jewellery from Indonesia on free on
board terms. Under these terms the non-resident seller has
agreed to deliver the jewellery on board a vessel at a named
port in Indonesia. Susan must provide the seller with
details of the name of the ship, and when to deliver the
jewellery to that ship. Susan assumes all risk of loss or
damage from the time the goods have passed the ship's rail
at the port of shipment in Indonesia.
Susan contracts with a non-resident shipping company through
its agent in Australia to deliver the goods to Port Botany
in Sydney. Susan also has a separate contract with an
Australian freight forwarder to collect the jewellery at
Port Botany, and deliver the jewellery to her house at
Temora, New South Wales.
Susan's contract with the non-resident shipping company to
deliver the goods to Port Botany in Sydney is the relevant
international transport agreement (primary agreement) under
which the jewellery is brought to Australia and therefore it
is this agreement that determines the place of consignment.
The place of consignment is Port Botany, the place that
Susan, the importer, has agreed to take delivery of the
goods, as this is the place to which the goods are delivered
under the contract for the delivery of goods to Australia
(primary agreement).
The supply of international transport by the shipping
company to Susan is GST-free.
The freight forwarder's supply of transport services is
subject to GST. This reflects that the transport services
occur after the place of consignment at Port Botany.
Australian transport leg of an export transport supply
21. The transport of goods by transport subcontractors within Australia
that forms part of the international transport of those goods by
another entity from Australia is GST-free if made to a non-resident
that is not in Australia. However, the supply is subject to GST
where it is made to a resident or a non-resident that is in
Australia at the time the supply is made. [Schedule 1, item 5,
subsection 38-355(1); items 6 and 7, item 5 in the table in
subsection 38-355(1); item 9, subsection 38-355(2)]
22. These amendments also ensure that section 38-355 of the GST Act is
the primary provision that makes supplies of international
transport GST-free. Item 3 of subsection 38-190(1) of the GST Act
will not apply to the transport of goods to or from Australia and
other supplies that are related to that transport supply. The
amendments achieve this by ensuring that subsection 38-190(4) of
the GST Act has no application to supplies of transport of goods
within Australia that are part of, or are connected with, the
international transport of the goods. This includes all transport
from the point of origin in Australia to the point at which goods
depart from Australia as well as the costs of insuring, loading,
handing and arranging transport of those goods. [Schedule 1, item
4, subsection 38-190(5)]
23. Where transport suppliers provide both the Australian and
international legs of international transport then the transport
supply is GST-free. [Schedule 1, item 9, paragraph 38-355(2)(b)]
24. Treating the Australian leg of international transport as taxable
for transport subcontractors in all circumstances when supplied to
an Australian entity or a non-resident entity with a presence in
Australia reduces compliance costs for GST-registered subcontractor
transport entities. This is achieved by allowing them to apply the
same GST treatment to all transported goods, regardless of whether
the goods are for Australian delivery or export or whether the
entity to which the goods are ultimately being provided to is
outside of Australia. This is important because transport
subcontractors may carry a range of goods that are for final
delivery both in Australia and overseas and they may not be aware
of the final destination of some goods.
25. The amendments broadly align the tax treatment of the pre-
containerisation leg of a non-postal export supply with the
treatment of a postal export supply. This ensures consistent tax
treatment of the pre-and post-containerisation legs of a non-postal
supply of containerised goods as both are GST-free where they form
part of a single international transport supply. [Schedule 1, item
14, definition of 'place of export' in section 195-1; item 4,
subsection 38-190(5)]
26. For non-postal goods the 'place of export' definition is amended to
ensure that the last leg in which the goods are collected from a
location prior to being packed in a freight container is GST-free
for certain suppliers [Schedule 1, item 14, definition of 'place of
export' in section 195-1]. This reflects that goods will usually
be collected from an earlier location for packing in a freight
container. If the goods have been manufactured at the place of
packing (that is, at a factory), then international transport from
this location continues to be GST-free for certain suppliers.
Example 1.3: Outbound removalist
Stan is registered for GST and operates an international
removalist company which undertakes both the Australian and
international legs of international removals.
Stan has been engaged by Jessica, who is moving overseas, to
transport her household items to London and to supply
insurance for the transport of the goods. Stan collects
Jessica's goods and moves the goods in a truck to his depot
where they are placed in a container.
The place of export is now the place the goods are collected
by Stan (Jessica's residence) as opposed to where the goods
are placed in a container. Stan's entire international
transport supply is now GST-free.
Example 1.4: Outbound sale of goods
A buyer in India orders goods from an Australian-based
manufacturer (manufacturer). The goods are transported by
Local Transporters under a contract with the manufacturer to
a place where they will be collected by the transport
supplier who will transport the goods from Australia. The
manufacturer contracts with a separate transport supplier,
Global Transporter, to move the goods from the place the
goods were delivered to by Local Transporters, and then to
transport the goods to India in a container.
Under the definition of 'place of export', the place of
export is the place Global Transporter collects the goods as
determined under the agreement that takes the goods from
Australia.
The supply by Local Transporters which occurs prior to the
place of export does not form part of international
transport and therefore cannot be GST-free under item 5 of
subsection 38-355(1). Additionally this supply is not GST-
free under item 3 in the table in subsection 38-190(1)
because of the effect of subsection 38-190(5).
The supply by Global Transporter, is GST-free under item 5
in the table in subsection 38-355(1) of the GST Act as
subsection 38-355(2) does not restrict the application of
this item under these circumstances.
Loading, handling and other services
27. These amendments also ensure that other services that facilitate
the international transport of goods, such as loading, handling and
other services, can qualify for GST-free treatment [Schedule 1,
item 8, item 5A in the table in subsection 38-355(1)]. For
example, supplies of fumigation services that are carried out to
facilitate the international transport of goods are
GST-free for inbound and outbound movement of goods when:
. supplied by the transporter that brings the goods to or
from Australia; or
. supplied by another party to a non-resident that is not in
Australia.
28. The GST treatment of loading, handing and other services reflects
the intention that GST-free treatment should extend to not only
international transport but also necessary related services to
prevent embedded tax arising for non-residents.
29. As a result of the inclusion of specific provisions to address the
GST treatment of loading, handling and other services, there is a
consequential amendment to remove references to loading and
handling from the definition of 'international transport'.
[Schedule 1, item 12, definition of 'international transport' in
section 195-1]
30. The amendments ensure that any existing determinations that set out
the amount paid or payable for certain transport or insurance
continue to apply despite the extension of the determination-making
power to include loading, handling and similar services. [Schedule
1, item 3, paragraphs 13-20(3)(b) and (c); item 15]
Application and transitional provisions
31. These amendments apply on and from 1 July 2010. In particular, the
amendments apply to:
. supplies made on or after 1 July 2010; and
. taxable importations made on or after 1 July 2010.
[Schedule 1, subitem 16(1)]
32. The amendments also apply to relevant services performed after
1 July 2010 concerning imported goods that have not given rise to a
taxable importation prior to 1 July 2010. This will include
imported goods held in Australia immediately prior to 1 July 2010
that have not yet given rise to a taxable importation because, for
example, they have not yet been entered for home consumption.
[Schedule 1, subitem 16(1)]
33. However, the transitional provision ensures the amendments do not
apply to a supply of services that occurs on or after 1 July 2010
to the extent the services relate to a taxable importation of goods
made prior to 1 July 2010. This transitional provision ensures
symmetry of treatment between importations and supplies made in
relation to those importations. [Schedule 1, subitem 16(2)]
Consequential amendments
34. The changes to the place of export and place of consignment made by
the amendments have a consequential impact on the GST treatment
that applies to:
. insuring the international transport of goods to and from
Australia; and
. arranging the international transport of goods to and from
Australia.
[Schedule 1, item 13, definition of 'place of consignment' in
section 195-1 and item 14, definition of 'place of export' in
section 195-1]
35. There is a consequential amendment to ensure that the amount paid
or payable for loading, handling and related services that is
included in the value of taxable importations can be converted to
Australian currency. [Schedule 1, item 2, subsection 13-20(2A)
36. The amendments also make a consequential amendment to ensure that
the amount paid or payable for loading, handling and related
services is included in the value of taxable importations for goods
that were exported for repair or renovation and that the amount can
be converted to Australian currency. [Schedule 1, item 10,
paragraph 117-5(1)(ba), and item 11, subsection 117-5(1A)]
Chapter 2
GST relief for telecommunication supplies for global roaming in Australia
Outline of chapter
37. Schedule 2 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 (GST Act) to ensure telecommunication
supplies under global roaming arrangements provided to subscribers
of non-resident telecommunication suppliers while 'roaming' in
Australia remain not subject to goods and services tax (GST). The
global roaming telecommunication supplies covered by the amendment
are mobile telephone global roaming and mobile Internet roaming.
38. This is consistent with an obligation imposed on Australia under
the International Telecommunication Regulations (Melbourne,
9 December 1988) known as the 'Melbourne Agreement'.
Context of amendments
39. Australia is a party to the Melbourne Agreement. Article 6.1.3 of
the Melbourne Agreement provides that tax levied in accordance with
the national law of a country on 'collection charges for
international telecommunication services' can only be collected 'in
respect of international services billed to customers in that
country'.
40. This means that international telecommunication supplies made under
arrangements for global roaming in Australia and provided to
subscribers of non-resident telecommunication suppliers while those
subscribers are 'roaming' in Australia, should not be subject to
GST.
41. Up until 14 December 2005 these international telecommunication
supplies were considered not to be taxable under the Australia GST
law. However, the Commissioner of Taxation then determined that
these supplies were taxable under the provisions of the GST Act.
42. Therefore it is necessary to amend the GST Act to ensure that the
treatment of these supplies remains consistent with the Melbourne
Agreement.
Operation of the existing law
43. Under section 9-5 of the GST Act an entity makes a taxable supply
if:
. it makes the supply for consideration;
. the supply is made in the course or furtherance of an
enterprise that the entity carries on;
. the supply is connected with Australia; and
. the entity is registered, or required to be registered.
However, the supply is not a taxable supply to the extent that it
is GST-free or input taxed.
44. Division 38 sets out supplies that are GST-free. Subdivision 38-E
sets out when exports and other supplies for consumption outside
Australia are GST-free. Section 38-190 covers supplies of things,
other than goods or real property, that are for consumption outside
Australia.
45. The table in subsection 38-190(1) lists five items which set out
supplies of things, other than goods or real property, that are GST-
free.
46. Item 2 in the table treats as GST-free a supply made to a non-
resident who is not in Australia when the thing supplied is done
if:
. the supply is neither a supply of work physically
performed on goods situated in Australia when the work is
done nor a supply directly connected with real property
situated in Australia; or
. the non-resident acquires the thing in carrying on the non-
resident's enterprise but is not registered or required to
be registered.
47. However, a supply covered by item 2 in the table in subsection 38-
190(1) is not GST-free if it is a supply under an agreement entered
into, whether directly or indirectly, with a non-resident and the
supply is provided (or the agreement requires it to be provided) to
another entity in Australia (subsection 38-190(3)).
Application of the existing law to international telecommunication supplies
for global roaming in Australia
48. Global roaming occurs when a subscriber to an overseas
telecommunication supplier is visiting Australia and uses a mobile
phone or other portable device to connect to an Australian
telecommunication supplier's network. The visiting subscriber is
able, by connecting to the network, to obtain telephony services
such as making and receiving phone calls and short messaging
service (SMS) text messages, accessing emails and browsing the
Internet.
49. The visiting subscriber has an agreement with their home country
telecommunication supplier (the non-resident telecommunication
supplier) for the provision of global roaming in Australia. This
allows them to use a portable device whilst in Australia, to access
telecommunication services through their home network subscription.
50. The non-resident telecommunication supplier enters into a wholesale
roaming agreement with an Australian telecommunication supplier
that allows their subscribers visiting Australia to 'roam' on the
Australian telecommunication supplier's network for accessing
telecommunication services. (The Australian telecommunication
supplier may be supplying only part of the service, which may
travel over networks owned by other telecommunication suppliers
including the home country telecommunication supplier.) The
Australian telecommunication supplier has no contract with the
visiting subscriber and the Australian telecommunication supplier
bills the subscriber's home country telecommunication supplier for
access to Australian network services (the supply by the Australian
resident telecommunication supplier).
51. The subscriber's home country telecommunication supplier bills the
subscriber for global roaming provided in Australia through their
billing arrangements in the home country (the supply by the non-
resident telecommunication supplier).
52. The supply by the Australian resident telecommunication supplier to
the non-resident telecommunication supplier is GST-free under item
2 in the table in subsection 38-190(1). However, the GST-free
status of that supply is negated by subsection 38-190(3) because it
is provided to another entity (the visiting subscriber) in
Australia.
53. The supply by the non-resident telecommunication supplier to the
subscriber while visiting Australia is performed, in part, in
Australia and therefore the supply is, to that extent, 'connected
with Australia' pursuant to paragraph 9-25(5)(a). If the other
requirements of section 9-5 are met, the supply by the non-resident
telecommunication supplier is (wholly or partly) a taxable supply.
The impact of the Melbourne Agreement
54. The imposition of GST on the supply by the Australian resident
telecommunication supplier and the supply by the non-resident
telecommunication supplier is considered to be inconsistent with
Australia's treaty obligations under the Melbourne Agreement.
55. This amendment ensures that these global roaming telecommunication
supplies are GST-free with effect from 1 July 2000.
Summary of new law
56. The amendment makes GST-free the following telecommunication
supplies for global roaming in Australia, which are provided to
subscribers of a non-resident telecommunication supplier while the
subscribers are visiting Australia:
. the supply made by an Australian resident
telecommunication supplier to a non-resident
telecommunication supplier of use of its network in
Australia and provided to subscribers of the non-resident
telecommunication supplier when visiting Australia (the
supply by an Australian resident telecommunication
supplier); and
. the supply by the non-resident telecommunication supplier
of global roaming in Australia made to its subscribers
visiting Australia (the supply by the non-resident
telecommunication supplier).
Comparison of key features of new law and current law
|New law |Current law |
|The telecommunication supply |The telecommunication supply |
|for global roaming in |for global roaming in |
|Australia, made by an |Australia, made by an |
|Australian resident |Australian resident |
|telecommunication supplier to |telecommunication supplier to|
|a non-resident |a non-resident |
|telecommunication supplier and|telecommunication supplier |
|provided to a subscriber of |and provided to a subscriber |
|the non-resident |of the non-resident |
|telecommunication supplier |telecommunication supplier |
|while roaming in Australia, is|while roaming in Australia, |
|GST-free. |is subject to GST. |
|The telecommunication supply |The telecommunication supply |
|for global roaming in |for global roaming in |
|Australia, made by the |Australia, made by the |
|non-resident telecommunication|non-resident |
|supplier to its subscriber |telecommunication supplier to|
|visiting Australia, is |its subscriber visiting |
|GST-free. |Australia, is subject to GST.|
Detailed explanation of new law
Amendments relating to telecommunication supplies made under arrangements
for global roaming in Australia
57. Subdivision 38-R is inserted into the GST Act to ensure that
telecommunication supplies made under arrangements for global
roaming in Australia are GST-free.
58. New section 38-570 means that telecommunication supplies made under
arrangements for global roaming in Australia are GST-free.
Specifically, the supply by an Australian resident
telecommunication supplier (a carrier or carriage service provider
as defined in the Telecommunications Act 1997 or an Internet
service provider as defined in Schedule 5 to the Broadcasting
Services Act 1992) made to a non-resident telecommunication
supplier and provided to a subscriber of the non-resident
telecommunication supplier while roaming in Australia, is GST-free.
Further, the supply by the non-resident telecommunication supplier
of global roaming in Australia, made to its subscriber visiting
Australia, is also GST-free.
59. Subsection 38-570(1) describes a telecommunication supply under a
global roaming arrangement that will be GST-free. Such a supply is
to enable the use of a portable device (such as a mobile phone or
laptop computer) in Australia while the device is linked to an
International Mobile Subscriber Identity number (in the case of
phone roaming), an Internet Protocol address (in the case of
Internet roaming), or another internationally recognised identifier
containing a home network identity which indicates that the
subscription is to a telecommunication network outside Australia.
The supply is made by either a non-resident telecommunication
supplier or an Australian resident telecommunication supplier.
[Schedule 2, item 1, subsection 38-570(1)]
60. Subsection 38-570(2) describes the supply by the non-resident
telecommunication supplier under a global roaming arrangement.
This supply is made to the subscriber (the visitor to Australia) in
connection with their subscription to a telecommunication network
outside Australia, the supply is billed to the subscriber's address
outside Australia and the supply is made by a non-resident
telecommunication supplier that carries on the enterprise of making
telecommunication supplies outside Australia and not in Australia.
[Schedule 2, item 1, subsection 38-570(2)]
61. Subsection 38-570(3) describes supply by an Australian resident
telecommunication supplier under a global roaming arrangement.
This supply is made by an Australian resident carrier, carriage
service provider or Internet service provider to the non-resident
telecommunication supplier and is provided to the user in Australia
of the device described in subsection 38-570(1). [Schedule 2,
item 1, subsection 38-570(3)]
62. This amendment applies to supplies made on or after 1 July 2000
(the commencement of the GST). The retrospective application
benefits suppliers as it is consistent with the existing industry
practice of not applying GST to these supplies. [Schedule 2, item
2]
Examples of the application of new section 38-570 to telecommunication
supplies made under arrangements for global roaming in Australia
1.
UK Phone Ltd, a telecommunication supplier in the United
Kingdom carries on outside Australia an enterprise of making
telecommunication supplies and does not carry on in
Australia such an enterprise (a non-resident
telecommunication supplier). Charlie (a subscriber) resides
in the United Kingdom and has a contract with UK Phone Ltd
(a subscription). Under that contract, UK Phone Ltd
supplies Charlie with telecommunication services including
mobile phone and Internet services in the United Kingdom and
global roaming in Australia. Charlie is billed to his
address in the United Kingdom.
To supply Charlie (and its other customers) with global
roaming in Australia, UK Phone Ltd enters into a wholesale
agreement with an Australian telecommunication supplier, Aus
Phones Plus, to provide access to its Australian network to
subscribers of UK Phone Ltd roaming in Australia.
While in Australia and global roaming on an Australian
network, Charlie uses his smart phone under contract with UK
Phone Ltd to make and receive phone calls and emails, use
SMS, access the Internet and picture messaging etc.
Despite Charlie being physically located in Australia and
global roaming on an Australian telecommunication network,
the supply of global roaming is GST-free (both the supply by
the non-resident telecommunication supplier and the supply
by the Australian resident telecommunication supplier).
This is because:
. Charlie is using a portable device in Australia for sending
and receiving signals, writing, images, sound and
information and the device is linked to an international
mobile subscriber number containing a home network identity
that indicates a subscription to a telecommunication network
in the United Kingdom (that is, outside Australia) -
paragraph 38-570(1)(a);
. The supply is made to Charlie in connection with his
subscription to UK Phone Ltd - paragraph 38-570(2)(a);
. Charlie is billed for the supply to his address in the
United Kingdom - paragraph 38-570(2)(b);
. UK Phone Ltd carries on outside Australia an enterprise of
making telecommunication supplies and does not carry on in
Australia such an enterprise - paragraph 38-570(2)(c);
. Aus Phones Plus is an Australian resident carriage service
provider and provides Charlie, the user in Australia of the
device, with telecommunication supplies - subparagraph 38-
570(3)(a)(i) and paragraph 38-570(3)(b); and
. Aus Phones Plus makes the supply to UK Phone Ltd, a non-
resident telecommunication supplier - paragraph 38-
570(3)(c).
While in Australia, Charlie's smart phone is damaged and he
acquires a replacement. Charlie inserts his Subscriber
Identity Module (SIM) card into that phone so that he is
able to continue to access his subscription to UK Phone Ltd.
The supply of global roaming is still GST-free (both the
supply by the non-resident telecommunication supplier and
the supply by the Australian resident telecommunication
supplier). This is because:
. Charlie is using a portable device in Australia for sending
and receiving signals, writing, images, sound and
information and the device is linked to an international
mobile subscriber number containing a home network identity
that indicates a subscription to a telecommunication network
in the United Kingdom (and so on).
2.
NZ Telco carries on outside Australia an enterprise of
making telecommunication supplies and does not carry on in
Australia such an enterprise. A New Zealand resident
company, NZ Co, has a mobile phone agreement with NZ Telco
that enables employees of NZ Co to utilise mobile services
in New Zealand and global roam in Australia (the supply by
the non-resident telecommunication supplier).
Hayley, an employee of NZ Co, uses her mobile phone in
Australia to call an Australian business contact, make calls
to New Zealand and receive calls from Australia and New
Zealand. The calls made and received involve usage of Aus
Telco's Australian network as permitted under the
international roaming agreement between NZ Telco and Aus
Telco (the supply by the Australian resident
telecommunication supplier).
The supply by the non-resident telecommunication supplier
made by NZ Telco to NZ Co and the supply by the Australian
resident telecommunication supplier made by Aus Telco to NZ
Telco and provided to Hayley in Australia are both GST-free.
This is because:
. Hayley is using a portable device in Australia for sending
and receiving signals, writing, images, sound or information
and the device is linked to an international mobile
subscriber number containing a home network identity that
indicates a subscription to a telecommunication network in
New Zealand (that is, outside Australia) - paragraph 38-
570(1)(a);
. The supply is made to NZ Co in connection with its
subscription to NZ Telco - paragraph 38-570(2)(a);
. NZ Co is billed for the supply to its address in New Zealand
- paragraph 38-570(2)(b);
. NZ Telco carries on outside Australia an enterprise of
making telecommunication supplies and does not carry on in
Australia such an enterprise - paragraph 38-570(2)(c);
. Aus Telco is an Australian resident carrier and provides
Hayley with telecommunication supplies in Australia -
subparagraph 38-570(3)(a)(i) and paragraph 38-570(3)(b); and
. Aus Telco makes the supply to NZ Telco, a non-resident
telecommunication supplier - paragraph 38-570(3)(c).
3.
UKinternet Ltd (a United Kingdom Internet service provider)
carries on outside Australia an enterprise of making
telecommunication supplies and does not carry on in
Australia such an enterprise. Julia resides in the United
Kingdom and has a subscription with UKinternet Ltd.
UKinternet Ltd provides Julia with broadband internet within
the United Kingdom. She operates a voice over Internet
protocol (VOIP) account and an email account through her
broadband subscription. Prior to visiting Australia, Julia
arranges with UKinternet Ltd to activate global roaming,
which allows her to access her UKinternet Ltd service whilst
in Australia (a supply by a non-resident telecommunication
supplier) via her laptop.
UKinternet Ltd enters into a wholesale relationship with
Austinternet Ltd, an Australian internet service provider,
to provide UKinternet Ltd's global roaming customers with
access to Austinternet Ltd's network. While in Australia,
Julia enters her UKinternet Ltd username and password. She
is then connected to her UKinternet Ltd account via
Austinternet Ltd's network. UKinternet Ltd imposes a user
charge on this service which appears on Julia's UKinternet
Ltd account in the United Kingdom.
The supply by the non-resident telecommunication supplier,
made by UKinternet Ltd to Julia and the supply by the
Australian resident telecommunication supplier, made by
Austinternet Ltd to UKinternet Ltd and provided to Julia in
Australia, are both GST-free. This is because:
. Julia is using a portable device in Australia for sending
and receiving signals, writing, images, sound or information
and the device is linked to an Internet Protocol address
containing a home network identity that indicates a
subscription to a telecommunication network in the United
Kingdom (that is, outside Australia) - paragraph 38-
570(1)(a);
. The supply is made to Julia in connection with her
subscription to UKinternet Ltd - paragraph 38-570(2)(a);
. Julia is billed for the supply to her address in the United
Kingdom - paragraph 38-570(2)(b);
. UKinternet Ltd carries on outside Australia an enterprise of
making telecommunication supplies and does not carry on in
Australia such an enterprise - paragraph 38-570(2)(c);
. Austinternet Ltd is an Australian resident Internet service
provider and provides Julia with telecommunication supplies
in Australia - subparagraph 38-570(3)(a)(ii), paragraph 38-
570(3)(b); and
. Austinternet Ltd makes the supply to UKinternet Ltd, a non-
resident telecommunication supplier - paragraph 38-
570(3)(c).
4.
Cheap Fones Pty Ltd carries on in Australia an enterprise of
making telecommunication supplies. Edwin, a United Kingdom
resident who is currently in Australia, enters into a
telecommunication contract with Cheap Fones Pty Ltd (an
Australian resident telecommunication supplier) to provide
him with mobile telephone services, including global
roaming, while he is in Australia. The supply of
telecommunication services by Cheap Fones Pty Ltd to Edwin
is not covered by new section 38-570 and is subject to GST.
Although Edwin is a non-resident, he is a subscriber of an
Australian resident telecommunication supplier. There is no
supply between a non-resident telecommunication supplier and
its subscriber and consequently no supply made by an
Australian resident telecommunication supplier to a non-
resident telecommunication supplier to provide a subscriber
of the non-resident telecommunication supplier with access
to the Australian resident telecommunication supplier's
network in Australia. The supply made by Cheap Fones Pty
Ltd is a taxable supply (assuming the requirements of
section 9-5 are satisfied).
If Edwin were to visit an Internet café in Australia to
access Internet services, the supply of Internet access to
Edwin by the Internet café would also be a taxable supply as
it is not a supply between a non-resident telecommunication
supplier and its subscriber.
Global roaming telecommunication supplies
63. The type of telecommunication supply provided to the user of a
portable device under a global roaming arrangement is not limited
by this amendment. Those supplies include transmission of voice,
pictures and text messages, email and Internet access. A variety
of information and entertainment services may be delivered by
telecommunication suppliers to roaming customers. A charge that is
for the content delivered to a portable device as distinct from the
transmission service to deliver that content is not covered by this
amendment. For example, a separate charge for a pay-per-view
sporting event that is delivered to a portable device is not for a
telecommunication supply.
Portable devices for the purposes of section 38-570
64. Due to the convergence of telecommunication device capabilities in
recent years, there are many portable devices which subscribers of
non-resident telecommunication suppliers may use to access global
roaming in Australia. These include mobile phones, smart phones,
personal digital assistants, laptop computers and Universal Serial
Bus (USB) modems. However, portable devices do not include devices
that do not use telecommunication networks, for example, walkie
talkies and radio communications devices.
Application and transitional provisions
65. This amendment applies to supplies made on or after 1 July 2000,
the commencement date of the GST.
Chapter 3
GST amendments to third party payment adjustment provisions
Outline of chapter
66. Schedule 3 to this Bill amends the A New Tax System (Goods and
Services Tax) Act 1999 (GST Act) to ensure the third party payment
adjustment provisions operate appropriately, irrespective of
whether relevant parties in the supply chain are members of the
same goods and services (GST) group, GST religious group or GST
joint venture.
Context of amendments
67. Where a registered entity supplies a thing to another entity
(intermediary) and that intermediary on sells that thing to a third
party, the original supplier (the payer) of the thing sometimes
makes a payment (a third party payment) to the third party (the
payee). Under Division 134, the third party payment adjustment
provisions, which come into effect on 1 July 2010, the payer remits
GST based on the price for which it sells the thing to the
intermediary but can also claim a decreasing adjustment for the
third party payment. If the payee is a registered entity it is
required to make an increasing adjustment to reflect the effective
decrease in the consideration paid for the thing. No increasing
adjustment arises if the payee is not registered for GST. The net
outcome should be that the appropriate amount of GST is collected
throughout the supply chain - that is, in the case of taxable
supplies, one-eleventh of the final (GST-inclusive) purchase price.
68. Due to their interaction with existing GST grouping, GST religious
grouping and GST joint venture rules, the third party payment
adjustment provisions can have unintended consequences for third
party payments involving members of the same GST group or GST
religious group and operators and participants in a GST joint
venture.
Payer and intermediary grouped
69. Paragraph 134-5(1)(b) states that, for a decreasing adjustment to
arise for a payment to a third party, the supply to the
intermediary must be a taxable supply. However, sections 48-40 and
49-30 of the GST Act provide that a supply made between members of
the same GST group, or GST religious group, will be treated as if
it were not a taxable supply. This results in payers who are
members of the same GST group, or GST religious group, as the
intermediary to which the supply is made, being unable to claim a
decreasing third party payment adjustment where they would
otherwise be entitled to do so if the supply had been taxable under
the general rules. Further, an increasing adjustment will arise in
respect of the third party payment (unless the payee is also a
member of the same group). As a result, too much GST is collected
through the supply chain.
Intermediary and payee grouped
70. Conversely, paragraph 134-10(1)(b) states that, for an increasing
adjustment to arise for a payment to a third party, the payee's
acquisition from the intermediary must be a creditable acquisition.
However, sections 48-45 and 49-35 of the GST Act provide that an
acquisition from a member of the same GST group, or GST religious
group, is not a creditable acquisition. This results in payees who
are members of the same GST group, or GST religious group, as the
intermediary from which the acquisition is made, not being required
to make an increasing adjustment where they would otherwise be
required to do so if the acquisition would have been a creditable
acquisition under the general rules. Further, a decreasing
adjustment will arise in respect of the third party payment (unless
the payer is also a member of the same group). As a result, too
little GST is collected through the supply chain.
GST joint ventures
71. Similar unintended consequences arise for third party payments
involving participants in a GST joint venture. Subsection 51-30(2)
of the GST Act provides that a supply that a joint venture operator
makes to a participant in the GST joint venture is treated as if it
were not a taxable supply in certain circumstances. If the GST
joint venture operator subsequently makes a third party payment to
another entity then it will be unable to claim a decreasing
adjustment where it would otherwise be entitled to do so if the
supply had been taxable under the general rules. However, an
increasing adjustment may still arise in respect of the third party
payment resulting in too much GST being collected through the
supply chain.
72. Conversely, a participant in a GST joint venture may acquire a
thing from its GST joint venture operator. As the acquisition is
not a creditable acquisition (because the supply to it is treated
as if it were not a taxable supply as a result of subsection 51-
30(2) of the GST Act) it is not required to make an increasing
adjustment where it would have otherwise been required to if the
acquisition would have been a creditable acquisition under the
general rules. However, a decreasing adjustment may still arise in
respect of the third party payment resulting in too little GST
being collected through the supply chain.
73. An example of where the overall GST collected would exceed one-
eleventh of the price of the final supply is illustrated in Example
3.1.
1. : GST groups: Payer and intermediary grouped - no decreasing
adjustment available
[pic]
In this example the manufacturer (the payer) is in a GST
group with the wholesaler. The manufacturer makes a supply
of goods to the wholesaler for $660 and pays a rebate of
$110 to the retailer of the goods. The supply from the
manufacturer to the wholesaler is not treated as a taxable
supply as they are members of the same GST group.
Consequently the manufacturer is not required to remit GST
on the supply and cannot claim a decreasing adjustment in
respect of the rebate.
When the wholesaler makes a supply of the goods to the
retailer for $880 the wholesaler has a GST liability of $80.
Because the acquisition from the manufacturer was an
acquisition from a member of the same GST group the
acquisition was not a creditable acquisition and no input
tax credit entitlement arises. The wholesaler must
therefore remit GST of $80.
The retailer sells the goods to a customer for $1,100 and
therefore has a GST liability of $100 and an entitlement to
input tax credits of $80. However, under Division 134 of
the GST Act, the retailer is required to make an increasing
adjustment of $10 in respect of the rebate and must
therefore remit net GST of $30.
In total, $110 of GST has been remitted in relation to the
supply of the goods. However, the GST normally payable on
supplies with a retail value of $1,100 is $100.
Summary of new law
74. From 1 July 2010 third party payment adjustments will arise where
there are payments which would normally give rise to such
adjustments but the relevant parties in the supply chain are
members of the same GST group, GST religious group or GST joint
venture.
Comparison of key features of new law and current law
|New law |Current law |
|A decreasing adjustment |A decreasing adjustment |
|arises if the supply from|does not arise if the |
|the payer to an |payer of the third party |
|intermediary which would |payment and the |
|ordinarily give rise to a|intermediary to which it |
|decreasing adjustment is |makes the related supply |
|not treated as a taxable |are members of the same |
|supply because the supply|GST group or GST |
|is between members of the|religious group or if the|
|same GST group or GST |payer is the operator of |
|religious group or by the|a GST joint venture and |
|GST joint venture |the intermediary is a |
|operator to a participant|participant in the GST |
|in the GST joint venture.|joint venture. |
| |An increasing adjustment |
|An increasing adjustment |does not arise if the |
|arises if the supply from|payee of the third party |
|an intermediary to a |payment and the |
|payee which would |intermediary from which |
|ordinarily give rise to |it makes the related |
|an increasing adjustment |acquisition are members |
|is not treated as a |of the same GST group or |
|creditable acquisition |GST religious group or if|
|because the supply is |the payee is a |
|between members of the |participant in a GST |
|same GST group or GST |joint venture and the |
|religious group, or by |intermediary is the |
|the GST joint venture |operator of the GST joint|
|operator to a participant|venture. |
|in the GST joint venture.| |
Detailed explanation of new law
75. Paragraph 134-5(1)(b) contains a provision that modifies the
requirement for supplies by the payer to be a taxable supply in
order to give rise to a decreasing adjustment, to include a supply
that would have been a taxable supply but for a reason which is
listed in subsection 134-5(3).
76. Paragraphs 134-5(2)(a) and (b) and subparagraph 134-5(2)(b)(ii)
contain provisions that modify the method for calculating a
decreasing adjustment arising under subsection 134-5(1), to take
account of the GST which would have been payable on a supply that
would have been a taxable supply, but for a reason which is listed
in subsection 134-5(3).
77. Subsection 134-5(3) lists the reasons why a supply may not be a
taxable supply but will still give rise to a decreasing adjustment
under subsection 134-5(1). The reasons are that the payer and the
other entity to which the supply is made are members of the same
GST group or GST religious group or that the payer is the joint
venture operator for a GST joint venture in which the other entity
is a participant.
78. Subsection 134-5(4) provides that subsection 134-5(3) does not
apply if the payer and the payee are both members of the same GST
group or GST religious group at the time the third party payment is
made.
79. Paragraph 134-10(1)(b) contains a provision that modifies the
requirement for an acquisition by the payee to be a creditable
acquisition in order to give rise to an increasing adjustment, to
include an acquisition that would have been a creditable
acquisition, but for a reason which is listed in subsection 134-
10(3).
80. Paragraphs 134-10(2)(a) and (b) and subparagraph 134-10(2)(b)(ii)
contain provisions that modify the calculation of an increasing
adjustment arising under subsection 134-10(1), to take account of
the input tax credit which would have been available had the
acquisition, been a creditable acquisition, but for a reason which
is listed in subsection 134-10(3).
81. Subsection 134-10(3) lists the reasons why an acquisition may not
be a creditable acquisition, but still give rise to an increasing
adjustment under subsection 134-10(1). The reasons are that the
payee and the other entity from which the acquisition is made are
members of the same GST group or GST religious group or the payee
is the joint venture operator for a GST joint venture in which the
other entity is a participant.
82. Subsection 134-10(4) provides that subsection 134-10(3) does not
apply if the payer and the payee are both members of the same GST
group or GST religious group at the time the third party payment is
made.
83. Section 134-30 ensures that the single entity rules in sections 48-
55 and 49-50 are not interpreted as overriding Division 134 and
preventing the relevant adjustments from arising. However,
sections 48-55 and 49-50 are taken into account in determining the
amount of increasing adjustment under subsection 134-10(2). This
means that, in determining the creditable purpose of the payee, the
payee's enterprise is not considered in isolation, but rather on
the basis that the GST group, or GST religious group, is a single
entity.
84. Under the existing sections 48-50 and 51-40, the relevant
adjustments will be made by the representative member of the GST
group, or in some circumstances the joint venture operator, as
appropriate.
Application and transitional provisions
85. These amendments apply to third party payments made on or after 1
July 2010.
Index
Schedule 1: GST and cross-border transport supplies
|Bill reference |Paragraph |
| |number |
|Item 1, paragraph 13-20(2)(ba) |1.16 |
|Item 2, subsection 13-20(2A) |1.35 |
|Item 3, paragraphs 13-20(3)(b) and (c); item|1.30 |
|15 | |
|Item 4, subsection 38-190(5) |1.22, 1.25 |
|Item 5, subsection 38-355(1); items 6 and 7,|1.21 |
|item 5 in the table in subsection 38-355(1);| |
|item 9, subsection 38-355(2) | |
|Item 8, item 5A in the table in subsection |1.27 |
|38-355(1) | |
|Item 9, subsection 38-355(2) |1.15 |
|Item 9, paragraph 38-355(2)(b) |1.23 |
|Item 10, paragraph 117-5(1)(ba) |1.36 |
|Item 11, subsection 117-5(1A) |1.36 |
|Item 12, definition of 'international |1.29 |
|transport' in section 195-1 | |
|Item 13, definition of 'place of |1.16, 1.19, |
|consignment' in section 195-1 |1.34 |
|Item 14, definition of 'place of export' in |1.25, 1.26, |
|section 195-1 |1.34 |
|Subitem 16(1) |1.31, 1.32 |
|Subitem 16(2) |1.33 |
Schedule 2: GST relief for telecommunication supplies for global roaming
in Australia
|Bill reference |Paragraph |
| |number |
|Item 1, subsection 38-570(1) |2.23 |
|Item 1, subsection 38-570(2) |2.24 |
|Item 1, subsection 38-570(3) |2.25 |
|Item 2 |2.26 |
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[1] Where the supply is made by a subcontractor that also brought the
goods to Australia, the supply is also GST-free.