Proposed Self-Assessment For GST In Australia

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

19 January 2011

As part of the Gillard Government's continuing focus on simplifying the tax system, Assistant Treasurer Bill Shorten has announced amendments to Australia's tax laws to allow taxpayers to self-assess indirect taxes such as goods and services tax (GST) and wine equalization tax (WET).

The Government is consulting on draft legislation that introduces a self-assessment system for GST and the other indirect taxes, and establishes a generic assessment framework that could be applied broadly across the tax system in the future.

"The amendments will reduce the complexity of the tax law associated with having different administration regimes for indirect taxes and income tax," said the Assistant Treasurer.

"Bringing indirect taxes into a self-assessment regime will decrease the need for advisors and administrators to have specialist knowledge of unique income tax or GST administration provisions. This could, in turn, result in a reduction in compliance and administrative costs in the longer-term," he added.

The draft measures implement the decision, announced in the 2009-10 Budget, that the Government would harmonize the existing self-actuating system for GST, WET, luxury car tax (LCT) and fuel tax credits with the income tax system of self-assessment. The greater standardization between the administration regimes of the two taxes will result in lower compliance costs for taxpayers, with common rules applying across the different taxes.

These changes implement recommendations made in the Board of Taxation's review of the legal framework for the administration of the GST, released in December 2008.

Other key features of the amendments include:

• Refreshing the four-year period of review for indirect taxes in cases where the amount of tax payable or refund entitlement has been amended in respect of the particular that led to the amendment;
• Clarifying the GST law to confirm that LCT and WET are part of the net amount calculated under the GST Act; and
• Setting up a generic assessment framework for indirect taxes in the Taxation Administration Act 1953 that could be applied more broadly across the tax system in the future.

The changes are to have effect from July 1, 2011. The exposure draft legislation is available on the Treasury website and the consultation closes on February 15, 2011.

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