Australia GST - 2004
Australia GST - 2004
Australia GST - 2004
Overview
Why did Australia introduce a GST? How does Australias GST work? Types of GST treatment and GST in the international context Administration of the GST Transition to the New Tax System
Internationally uncompetitive
WST cascaded through production hidden tax on exports & import competing firms.
Australias GST
GST introduced on 1 July 2000. Broadly, it is a tax on private consumption in Australia. The GST replaced the WST and a range of State indirect taxes. Applies at a flat rate of 10% to a broad base of goods and services and other supplies (such as property and rights). However, there are some exceptions. All GST revenue goes to the States and Territories.
GST $1,000 ITC $1,000 GST $2,000 ITC $2,000 GST $3,000
ATO collects:
Taxable:
Supplier must remit GST on the supply. Supplier is entitled to an ITC for GST paid on inputs that are used in their business. Eg supplies of furniture.
Input taxed:
Supplier does not remit GST on the supply. But is not entitled to ITCs for GST paid on inputs used in their business. Eg financial services and residential rent (but reduced input credits for financial services)
GST-free:
Supplier does not need to remit GST on the supply But is still entitled to an ITC for GST paid on inputs used in their business Eg. basic food, health, education, exports
Out of scope:
The supply is not taxable therefore the supplier does not need to remit GST. Eg supplies made by unregistered businesses.
Taxable import
Goods are subject to GST if they are imported into Australia and entered for home consumption.
Regardless of whether the importer is registered. Eg the import of presents is a taxable import.
However, to reduce administrative costs, a low value threshold applies in determining whether GST is collected on taxable importations.
Transition issues
Credits for stock on which you paid wholesale sales tax Motor vehicles input tax credits and operating leases Long-term non-reviewable contracts Other
Operating leases
A special (notional) input tax credit is available for certain vehicles purchased prior to 2 December 1998 and sold after 1 July 2000
In recognition that they would bear the unanticipated cost of GST and would not be able to pass this cost on in their other prices. Equal to the lesser of 1/11th of the amount the lessor paid for the motor vehicle or the amount of GST payable on the sale price.
Long-term contracts
Long-term non-reviewable contracts continue to remain GST-free until 30 June 2005 unless there has been a review opportunity. At this time, suppliers under these contracts will be able to adjust their prices to take account of the GST.
Other issues
Any changes to the GST base (10% rate or things subject to tax) require State and Territory approval. Compliance costs for businesses.
GST revenue
40,000 35,223 35,000 30,000 23,788 8.5% 14.1% 13.1% 30,699 12% 33,297 14% 16%
26,898
10% 8%
5.8% 3.8%
6% 4%
3.5%
5,000 2000-01 2001-02 GST revenue (mill) 2002-03 Grow th rate GST as %GDP 2003-04 2004-05
2% 0%