Cross-border transactions

All the recommendations of the Board of Taxation from its Review of the application of GST to cross-border transactions will be implemented, with effect from 1 July 2012.

This will reduce the number of non-residents who are unnecessarily drawn into Australia’s GST system, through:

• limiting the connection with Australian provisions,
• expanding the compulsory reverse charge provision, and
• extending the GST-free rules for cross-border supplies, and removing the need for some non-residents to register.

Components of the package that are a change to the GST base are subject to the unanimous agreement of the States and Territories.

Sale of boats for export

The Government has given manufacturers of recreational boats a tax break to help them compete with cheaper imports.

Eligible supplies of boats used for recreational purposes will be GST-free if the boats are exported from Australia within 12 months, with effect from 1 July 2011. The current limit is 60 days.

The measure is subject to the unanimous agreement of the States and Territories.

Minor changes

The start date for the following components of the 2009/10 Budget measure has been revised to 1 July 2011:

• adopting the income tax self assessment regime for indirect taxes and refresh the period of review
• reforming the change of use adjustments
• allowing adjustments for pre-registration acquisitions
• clarifying the treatment of tax law partnerships
• simplifying the GST grouping membership interest rules and allowing grouping of non-operating holding companies, and
• introducing a reverse charge for supplies of going concerns and farmland

Exemption for taxes, fees and charges

The GST law will be amended to replace the current mechanism for exempting Australian taxes, fees and charges with a principles-based legislative exemption, with effect from 1 July 2011.

This will replace the current requirement that Australian taxes, fees and charges are exempt from GST if they are included in a determination made by the Treasurer. The measure is intended to provide increased certainty to taxpayers and Government agencies in relation to the GST treatment of new taxes, fees and charges, as the tax treatment is not dependent on the item being listed in a determination.

Financial supplies

The financial supply provisions of the GST law will be amended to clarify the operation of the legislation and reduce compliance and administrative costs, particularly for many small businesses, with effect from 1 July 2012. The reforms include:

• increasing the threshold above which businesses need to interact with the financial supply provisions from $50,000 to $150,000 of input tax credits,
• protecting the GST base by reducing opportunities for businesses to inappropriately take advantage of the reduced input tax credit concessions by bundling services, and
• allowing small businesses accounting for GST on a cash basis to claim input tax credits up front in relation to hire purchase arrangements.

Margin scheme changes

Following consultation, the Government has determined that the margin scheme provisions will be restructured to clarify and simplify the current provisions, with effect from 1 July 2012.

The Government will also make a minor technical amendment to ensure that a valuation can be obtained for the purposes of using the margin scheme for subdivided land.

Cross-border transport supplies

A number of minor revisions to its 2009-10 Budget measure that reduces GST compliance costs for businesses involved in the domestic transport of exported and imported goods will be made, to ensure that the place of consignment will always be determined by the place of delivery in the principal contract.

The measure will also ensure that ancillary services to the international transport of goods receive the same GST treat.