INDIRECT TAX GOODS AND SERVICES TAX Overall, there are no real surprises announced in the Budget in relation to GST, particularly given that the Government has made a number of announcements during the past 12 months signalling its intention to amend certain aspects of the GST law.
In addition to the measures previously announced, the Government will make a number of other changes including those proposed for the supply of goods by non-residents. Interestingly, the Government has confirmed that it will not proceed with changes relating to the non-resident agent provisions and it will seek to clarify the definition of a permanent establishment for GST purposes.
The key changes announced are as follows:
EXTENSION OF GST-FREE PROVISIONS
EXTENSION OF THE GST COMPLIANCE PROGRAM
The GST-free provisions will be broadened to cover a range of additional nicotine replacement therapies. Currently, sales of nicotine replacement therapies sold in non-pharmacy settings are subject to GST. These measures ensure all types of nicotine replacement therapies approved for sale in Australia will be GST-free.
The Government will extend the GST compliance program and provide $195 million to the Tax Office in 2014-15 and 2015-16 to continue to promote voluntary compliance and provide a level playing field for Australian businesses. This will ensure the Tax Office continues to closely examine a range of issues including fraudulent GST refunds, under reporting of GST liabilities and failure to lodge GST returns. The measure is expected to result in additional GST collections of $986 million over the two year period. DEFERRAL OF BOARD OF TAXATION RECOMMENDATIONS - GST CROSS BORDER TRANSACTIONS The Government has announced the deferral of a number of previously announced measures aimed at implementing a number of recommendations of the Board of Taxation’s review of cross border transactions. These measures were scheduled to commence from 1 July 2012 and are now scheduled to commence in the first quarterly tax period after the amending legislation receives Royal Assent.
In addition, the Government will amend the previously announced measure relating to healthcare providers ensuring that a health supply by a healthcare provider paid for by a statutory compensation scheme operator is GST-free if the underlying supply from the healthcare provider to the individual is also GST-free. LIMITING THE COMMISSIONER’S ABILITY TO BACKDATE GST REGISTRATIONS The Commissioner’s ability to backdate GST registrations will be limited to four years with effect from 1 July 2012. This is consistent with other time periods in the GST administration regime. RITC FOR CREDIT UNIONS The law will be amended to allow access to a Reduced Input Tax Credit (“RITC”) for credit unions that rebrand as ‘banks’.This measure will apply from 1 July 2011 and will reinstatethe existing concession by allowing an RITC from an entity wholly owned by credit unions or rebranded credit unions.