Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]

SALES TAX ASSESSMENT REGULATIONS (AMENDMENT) 1996 NO. 241

STATUTORY RULES 1996 No. 241

ISSUED BY AUTHORITY OF THE ASSISTANT TREASURER

SALES TAX ASSESSMENT ACT 1992

SALES TAX ASSESSMENT REGULATIONS (AMENDMENT)

These Regulations ensure sales of goods to overseas travellers who travel under certain new visa arrangements will be exempt from sales tax.

Paragraph 30(1)(a) of the Sales Tax Assessment Act 1992 provides an exemption from sales tax for goods that are sold to certain foreign travellers. The exemption applies to sales made in accordance with the 'prescribed rules for export sales' to 'eligible foreign travellers'.

Regulation 5 of the Sales Tax Assessment Regulations (STAR) defines an 'eligible foreign traveller' for the purposes of the Act. Only travellers holding certain visas, which are specified in the regulation, can qualify as eligible foreign travellers.

Regulation 6 of the STAR provides that the 'prescribed rules for export sales' are set out in Schedule 1 to the STAR. Table 1 of Schedule 1 to the STAR contains the prescribed rules for export sales applicable to eligible foreign travellers. FT Rule 1 currently provides that the seller of the goods must sight, amongst other things, the purchaser's visitor visa. FT Rule 4 provides that the seller must make copies of, and retain, certain documents, including each document required to be sighted under FT Rule 1.

This system of sales tax exemption for eligible foreign travellers, known as the 'open bag system', currently relies upon passports bearing visa labels and airline tickets to foreign destinations to identify the travellers who are entitled to the exemption. (There is a different system of exemption for sales of goods to Australian residents, and holders of valid Australian passports, who are planning to travel out of Australia.)

Australia has recently begun to issue a new class of visa, which is known as the Electronic Travel Authority (Class UD) (ETA). The ETA is issued electronically at the time that a person purchases an aeroplane ticket to Australia, and does not appear in the person's passport.

ETAs will only be issued in a small number of countries. ETAs began to be issued on 11 September 1996 in Singapore and USA. ETAs have been issued in Canada from 25 September 1996, and will be issued in Japan from 1 November 1996. ETA countries will be gazetted.

The new regulations enable eligible foreign travellers who are holders of ETAs to purchase goods tax-free under the 'open bag system', by:

(i)        extending the definition of 'eligible foreign traveller' to include holders of ETA visas; and

(ii)        amending the 'prescribed rules for export sales' to reflect that ETA travellers no longer have evidence of a visa in their passports.

The Regulations are taken to have commenced on 11 September 1996, the date on which ETAs were first issued.

Details of the proposed regulations are as follows:

Regulation 1: provides that the Regulations commence on 11 September 1996.

Regulation 2: provides that the STAR are amended by the proposed regulations.

Regulation 3: amends regulation 5 of the STAR to include holders of Electronic Travel Authorities (Class UD) within the definition of 'eligible foreign traveller'. It also simplifies paragraph 5(c) by deleting obsolete references to certain transitional visas.

Regulation 4: clause 4.1. amends FT Rule 1 to replace the existing paragraph (a) with a new paragraph (a) that provides that prior to making a tax-free sale of goods, the seller must sight the purchaser's:

(i) ticket for travel from Australia to a foreign country; and

(ii) visitor visa or, if appropriate, passport indicating that the purchaser is a national of a country where ETA visas are issued, and containing no evidence of the grant of another visa to the purchaser.

Clause 4.2 amends FT Rule 4 by omitting existing paragraph (c) and replacing it with a new paragraph (c) which will require the seller to retain copies of the following documents:

(i)       the purchaser's ticket for travel from Australia to a foreign country; and

(ii)       either the purchaser's Australian visitor visa; or

(iii)       if the case requires, the page, or pages of the purchaser's passport which contains the personal particulars of the purchaser (including a photograph) and which identifies the issuing state; or

(iv)       a copy of the approved document referred to in FT Rule 1.

The effect of these 2 new paragraphs is that the only changes to existing practices will be the new procedures to deal with holders of ETAs.