GST in AUSTRALIA

[Nagesh Bajaj]

In the European Union, the consumption tax is called Value Added Tax or VAT. In some countries like New Zealand and Canada called their consumption tax as a goods and service tax (GST). In Australia, GST provisions are set out in a piece of Legislation called the ‘A New Tax System (Goods and Service Tax ) Act 1999’ and the GST was implemented on 11^th July, 2000. In Australia, GST is a part of the broader tax reform which replaces some indirect taxes. Australia’s GST is equivalent to consumption taxes as prevailed in other parts of the world.

In Australia, administration of the GST is handled by the Australian Taxation Office known as A.T.O. Australian Taxation Office are expressed in Public Rulings and there are more than 70 Public Rulings concerning the operation of the GST.

Prior to the GST, Australia operated a Wholesales Sales Tax (WST) which imposed a tax on wholesales of goods. The WST was introduced in the 30’s when Australia had an economy dominated by goods.

In Australia, no business is free from GST except certain transaction which is classified. Every business has transaction and because the GST is a tax on transactions they must track and record the transaction so that they can make the decisions about the taxability of transactions. Transaction were defined earlier as an exchange of resources-goods, services, resources and work effort resulting in inflows and outlaws. Transactions under GST are also called Supplies. Supplies are classified into three categories :-

 1. Taxable         2.  Input - taxed            3.  GST free

A  GST rate of 10% will be charged on most goods and services consumed in Australia. If registered , there are two types of sales which are treated differently:-

1. Suppliers of GST free goods and services are not have to pay GST, when they make a sale but they will be entitled to GST credits.
2. Suppliers of input taxed goods and services do not have to charge GST on sales but they are not be entitled to claim GST credits from their purchases of inputs.

GST is not payable on input taxed supplies where financial supplies, residential rent, residential premises and supplies of food made by school tuckshops and canteens are involved.

GST is not intended to apply to goods and services which are exported from Australia and there are specific provisions in the GST law designed to make exports GST-free. Despite this, overseas businesses which purchase Australian goods and services often find that the price payable includes GST.

If your business outside of Australia pays for goods from an Australian supplier and these goods are not exported from Australia within 60 days of payment, then GST will apply to the transaction. If your business outside of Australia pays to transport goods within Australia prior to them being exported from Australia, these transport costs may include GST. These are just two examples of how a purchase of goods exported from Australia may include a payment of GST.

Import Duty/ GST will be charged on following terms :-

If the goods (1) have a value over AUD $ 1000 or

(2) contain alcohol or tobacco of any quantity or value.

On the contrary, if goods are valued under AUD $1000 and do not contain alcohol or tobacco then not required to pay any Custom Import Duty/ GST or associated Custom charges. 

All imported goods are assigned a tariff classification obtained from the Australian Customs Tariff which determines the rate of duty will pay for the product.

To conclude the above, Australian goods and services tax revenue will be about A $ 13 billion ($ 12 billion ) more than estimated, Treasurer Wayne Swan said, increasing the funds available to states and to fund the government’s health reform programme.

 

 

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Author: Nagesh Bajaj

LawCrux Advisors (P) Ltd.

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