Sussan Ley (Farrer, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

I am pleased to speak on the Tax Laws Amendment (2009 GST Administration Measures) Bill 2009. This bill was introduced into the House on 25 November 2009 and implements some of the 46 recommendations made by the Board of Taxation from its review of the legal framework for the administration of the GST. I would like to say at the beginning that the coalition is supporting the passage of this bill through the House and the other place as it continues, substantially, a legislative program that was set in place by the last government.

There are six schedules in the bill and I will only briefly address each one. Schedule 1 implements recommendation 20 of the board’s report by introducing a four-year time limit for taxpayers to claim input tax credits and fuel tax credits. Schedule 1 will require taxpayers to claim any input tax credit or fuel tax credit within four years of the date that the credits are attributable. It was considered reasonable that beyond four years such claims probably should not be made. Schedule 1 also contains some exception to the four-year time limit to provide for the circumstances where the GST liability of a taxpayer changes. The amendments in schedule 1 take effect from budget night 2009.

Schedule 2 implements recommendation 31 of the board’s report by allowing residents of Australia’s external territories to claim refunds of GST and wine equalisation tax under the Tourist Refund Scheme if the goods are exported to the external territories after they are acquired. The changes in schedule 2 will apply to acquisitions that take place from 1 July 2010.

Schedule 3 implements recommendation 40 of the board’s report by allowing intermediaries that are not recognised by the common law as agents to act as principals for GST purposes and use the simplified accounting provisions. These amendments will apply to those who facilitate acquisitions and supplies between parties but who do not actually make the supply. Business would welcome that. Those changes do cut down on what would otherwise be some quite convoluted arrangements for the accounting and record-keeping provisions. The changes in schedule 3 will apply to acquisitions that take place from 1 July 2010.

Schedule 4 implements recommendation 41 of the board’s report by clarifying the uncertainty in the law regarding the application of GST to gambling operators who make GST-free supplies. The amendments ensure that the GST treatment of GST-free gambling supplies is consistent with other GST-free supplies. The amendments reflect the way that the Commissioner of Taxation currently administers the law. The changes in schedule 4 will apply from the first quarter after this bill receives royal assent.

Schedule 5 implements recommendation 44 of the board’s report by clarifying the law to specify that overclaimed refunds are due and payable on the same date that the overclaim is made. Schedule 5 ensures that there is a consistent treatment of the overclaimed refund to match the underpaid liability. And schedule 6 implements recommendation 46 of the board’s report by removing the inconsistent outcomes that arise when supplies are made to associate entities.

As I said at the outset, the coalition supports the measures in this bill, and I commend the bill to the House.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of the Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009. I will not speak for very long in relation to this matter, but it is important to get a bit of history into this.

The government did not want to review the scope of the GST, nor the amount or level of GST that is charged on goods and services throughout Australia. On 11 June, the then Assistant Treasurer, the Hon. Chris Bowen—and I see he is in the House—announced that the Board of Taxation would undertake a review of how to make the GST work better for all of us, how to ensure flexibility for small business and how to make sure it does not act as an impediment to the operation and integrity of the tax system.

As part of its scope, it was to look at the application of the GST, the rulings process, the period of review, how overpaid tax refunds are dealt with and also how to simplify other aspects. On 12 May last year, the then Assistant Treasurer announced the release of the board’s report with 46 recommendations, 41 of which were taken up by the government. The current Assistant Treasurer, Senator Nick Sherry, also announced the release of a draft bill on 6 October 2009 and that the government would take up the recommendations of the board—not in whole, but certainly substantially.

There were one or two changes to the draft bill as a result of representation that were made. But as is the case with so many tax bills, the amendments are done by schedule, and I will quickly go through those. Schedule 1 deals with the four-year review periods for credits. In its report, the Board of Taxation recommended that the law be amended to ensure input tax credits and the fuel tax credit be claimed within a four-year period. That is important; these things should not go on forever and the credit should be claimed within a period of four years. People’s tax situations should not drift and procrastinate. It is important that if you are going to claim the credit you should do it within a specified period of time. That is important for the good governance of the tax system as well.

Presently, all indirect tax liabilities and entitlements are subject to a four-year limitation period, but the absence of any restriction on input tax credits and fuel tax credits is an irregularity. The bill gives effect, as I said, to one of the board’s recommendations. The states and territories have advocated strongly for this change. It amends the fuel tax law with effect from 1 July 2010, and that is a worthy amendment in the circumstances.

17:21:53

Schedule 2 deals with the refund collection system. Currently external territory residents must claim refunds of GST and wine equalisation tax through the Tourist Refund Scheme for accompanied luggage. The amendments allow those residents, for example people who live on Norfolk Island or on Christmas Island, to claim refunds under the Tourist Refund Scheme on goods exported other than as accompanied baggage. The amendments generally commence on 1 July 2010 and apply to goods purchased on or after that date. The measure extends that scheme to allow residents of Australia living in those territories to get access, and it addresses any difficulties those residents have.

Schedule 3 also deals with agency provisions and makes some important amendments to remove anomalies It extends the range of entities that can use the agency provisions with respect to GST law and helps facilitate supplies and acquisitions. It helps make sure our tax system is better. It is supposed to reduce the compliance costs for entities, particularly intermediaries, principals, agents and third parties. I commend this aspect of the bill as well.

Schedule 4 deals with gambling activity for entities outside Australia and clarifies how the GST law may apply to those people who are gambling operators. The commissioner administers the GST in this way and I think it is important that we reduce uncertainty. I acted for quite a few people in the gambling industry when I was a practising lawyer. They always have trouble with the taxation system. It is not always easy for them to operate their businesses, whether they have casinos or they are simply engaged in the racing industry. We should do anything we can to make things easier for those vital industries operating pursuits that many Australians find very enjoyable. In my electorate of Blair there is a great racecourse, Bundamba, and Brett Kitching is an old mate of mine. My two brothers and I used to play basketball with him and his brothers. He runs that racecourse. It is an important part of the fabric of Ipswich and the Ipswich Cup is attended by thousands every year. I had many clients in the racing industry and the gaming industry so I know it is important to clarify how the GST law applies to gambling operators that accept wagers from entities outside Australia.

Schedule 5 deals with recovering overpaid refunds. The commissioner applies the Taxation Administration Act 1953 to treat overpayment refunds of a net amount on luxury car tax credits and fuel tax credits by administering overpayments with the general interest charge—they always seem to get more money out of us and interest. These are calculated on a resulting running balance account deficit debt when the administrative overpayment is allocated to the running balance account. There is some suggestion that case law makes this whole area a bit uncertain. I have read that the measure will ensure consistent treatment between taxpayers who incorrectly determine their liability to pay GST or other indirect taxes and taxpayers who incorrectly determine their entitlement to a refund. The commissioner always has discretion with respect to remitting GIC in part or in full and should do so if the error is innocently made. The measure forms part of the government’s response to the Board of Taxation review and should be commended.

The final schedule is schedule 6. The GST law sets out the requirements for a supply to be a taxable supply, including that supply made for consideration. It deals with associates who supply each other for no consideration. It fixes up an anomaly and it should be commended as well. This is reformist, non-contentious law supported by both sides and in the circumstances I commend the bill.

Chris Bowen (Prospect, Australian Labor Party, Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

I thank the members for Farrer and Blair for their contributions on the Tax Laws Amendment (2009 GST Administration Measures) Bill 2009. The amendments in this bill implement a number of government measures developed in response to the recommendations of the Board of Taxation in its review of GST administration, as the member for Blair said. The measures seek to reduce compliance costs, to streamline and improve the operation of the GST administration provisions and to remove anomalies.

The measure imposing a four-year limit on import tax credit and fuel tax credit claims contained in schedule 1 to the bill removes an anomaly in the current indirect tax law. These amendments ensure that, like all other indirect tax liabilities and entitlements, GST input tax credits and fuel tax credits cannot be claimed after four years. It contains appropriate exceptions to avoid disadvantaging taxpayers where there may be liabilities imposed outside this four-year period or where they are otherwise unable to claim credits in time and notify the Commissioner of Taxation.

Amendments in schedule 2 extend the current Tourist Refund Scheme to ensure that residents of Australian external territories such as Norfolk, Cocos (Keeling) and Christmas islands can claim refunds of GST or GST and wine equalisation tax under the scheme for unaccompanied baggage as well as accompanied baggage. This allows Australian external territory residents to purchase bulky goods in Australia, export them home and make a claim for a refund of GST or wine equalisation tax. The amendments to the domestic agency provisions in schedule 3 allow those who facilitate supplies and acquisitions but who are not common law agents to use accounting procedures in the subdivision 153-B of the GST act. These procedures are simpler for many intermediaries to use than the current procedures.

Schedule 4 clarifies the GST law relating to monetary prizes payable on GST-free bets including those bets accepted from entities outside Australia. The continued use of a global approach reduces compliance costs of gambling operators compared with the standard rules. Schedule 5, which deals with the GST, the luxury car tax and the fuel tax refunds and payment provisions, ensures that overpaid refunds are due and payable from the date of the overpayment and that they are subject to the general interest charge from the date of overpayment. This ensures consistent 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 improves certainty and clarifies the application of the GST, the luxury car tax and the fuel tax laws for taxpayers. This measure deals with the interaction of the GST associates provisions ensuring that supplies between associates for no consideration are treated under GST law as if the supply was for consideration. This removes anomalous outcomes where a supply may be treated differently for GST purposes depending on whether it is for consideration or not. This measure also improves certainty and clarifies the application of the GST law for associated entities. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.