Parliament Passes Australian GST Reforms

by Mary Swire, Tax-News.com, Hong Kong

22 June 2010

Australia’s parliament has passed legislation that will see significant improvements to the administration of the country’s goods and services tax (GST), and bring that tax and other indirect taxes into the general tax regulatory framework.

The legislation, which has now passed the Senate, should make GST tax affairs simpler and cheaper for the benefit of Australian businesses. "I welcome the passage of this legislation as it reduces compliance costs for taxpayers and clarifies a number of areas which have been of concern to the business community," Nick Sherry, the Assistant Treasurer, said.

It includes measures, each of which will apply from 1 July 1, 2010, to allow entities to self-assess their eligibility to form and make changes to a GST group or GST joint venture and to do so at any time during a tax period; and introduces clear exit rules for entities leaving a GST group or GST joint venture, by allowing entities to enter into indirect tax sharing agreements in relation to their indirect tax liabilities. It also introduces clearer and more flexible rules for tax invoices.

The Board of Taxation had previously recommended that there would be considerable benefits in bringing GST and other indirect taxes administered by the Commissioner of Taxation into the general tax regulatory framework as the current arrangements produce a degree of uncertainty and inflexibility. As a result, the legislation also contains the adoption of the general rulings system for GST and other indirect taxes from July 1, 2010.

This is an important streamlining measure that will simplify the tax law and provide consistent rules across different taxes. It will give the Commissioner the power to issue product and class rulings for GST and other indirect taxes and excise and allow taxpayers direct review rights if they are not satisfied with private rulings.

"I thank the tax profession and the Australian Taxation Office for working constructively on this matter and ensuring a smooth transition to a better rulings system for indirect taxes," Nick Sherry added.

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