Goods and Services Tax (Australia)
Encyclopedia
The GST is a broad sales tax of 10% on most goods and services transactions in Australia
. It is a value added tax
, not a sales tax
, in that it is refunded to all parties in the chain of production other than the final consumer.
It was introduced by the Howard Government
on 1 July 2000, replacing the previous Federal wholesale sales tax
system and designed to phase out a number of various State and Territory Government taxes, duties and levies such as banking taxes and stamp duty
.
was first proposed by then federal treasurer Paul Keating
at the 1985 Tax Summit but was dropped at the behest of then Labor
Prime Minister Bob Hawke
after pressure from the ACTU
, welfare groups and business, which did not like its association with proposals for capital gains
and fringe benefits taxes.
, and was the centrepiece of the opposition's "Fightback!
" platform at the 1993 election, when Keating was Prime Minister. The opposition had difficulty explaining the policy, as illustrated in leader Dr John Hewson
's Birthday Cake Interview
, and Keating's campaign exploited public distrust of the GST. The GST was to varying degrees considered a factor in the opposition's surprise election loss of the 'unloseable election' in 1993. In 1994 The Liberals decided to discard the remnants of Fightback and Alexander Downer
replaced Dr Hewson as Liberal leader.
John Howard
was re-elected leader of the Liberal party in 1995, and pledged "never, ever" to introduce the GST. Howard led the Liberal-National Coalition to a large victory in the 1996 elections.
Still, before the 1998 election, Howard proposed a GST that would replace all sales taxes, as well as applying to all goods and services. The Howard Government
finished on a two-party-preferred vote
of 49.02% at the election, suffering a swing of 4.61% to Labor on 50.98%. However, the incumbent government retained a parliamentary majority of seats in the lower house. Howard described the election win as a "mandate for the GST". Lacking a Senate
majority, and with Labor opposed to the introduction of the GST, the government turned to the minor parties such as the Australian Democrats
for support.
A prominent selling point of the legislation was that all revenues raised by the GST would be distributed to the states. As such, an agreement was enacted with the state and territory governments of Australia in 1999 that their various duties, levies and taxes on consumption would be removed gradually over time, with the budget shortfall being replaced by GST income from the Commonwealth Grants Commission
. Furthermore, (federally levied) personal income tax and company tax was reduced to offset the GST.
During the 1998 election campaign, the Democrats
leader Meg Lees
stated that her party was opposed to the GST unless food, books and tourism packages sold offshore were exempt and other tax measures were implemented. The government initially stated that these exemptions were not possible and looked more likely to win a compromise with independent Senator Brian Harradine
, but eventually a compromise was reached with Lees, including most basic food items being exempt from the GST, library purchases of books being refunded the GST, a temporary 8% refund on school textbooks, increases to welfare payments, and greater powers to the ACCC
. A proposal was made to exempt tampon
s from the GST but it was dismissed by the Prime Minister. The legislation was passed on 28 June 1999 as A New Tax System (Goods and Services Tax) Act 1999. It gained assent on 8 July 1999 and came into operation on 1 July 2000.
, viewed the dilution of the GST legislation as a success, but the issue split the Democrats, with Senators Natasha Stott Despoja
and Andrew Bartlett
crossing the floor
to vote against the GST. The move triggered infighting amongst the Democrats, and while the Democrats performed reasonably well in the 2001 federal election when Stott Despoja was party leader, the infighting worsened, resulting in Stott Despoja being forced out of the leadership and the loss, at the 2004 federal election, of the balance of power they once held in the Senate. The annihilation of the Democrats was completed at the following election in 2007 when they lost all their remaining seats, with the Australian Greens
becoming the major third party.
Australian Labor Party leader Kim Beazley
continued to oppose it during the Howard government's second term. During the 2001 election campaign, Labor made a 'GST rollback' a centrepiece of its election platform. Labor attempted to reprise the effects of the birthday cake interview by deriding the application of GST to cooked and uncooked chickens, but failed to ignite public response to the limited scope of the rollbacks applying only to gas and electricity bills. Labor lost the election, and though the 11 September attacks and the so-called Tampa affair
dominated the campaign, the loss would effectively end all serious opposition to the GST.
In early 2006, the New South Wales
State Government and the Federal Treasurer Peter Costello
launched adversarial advertising campaigns concerning distribution of the GST to the states. New South Wales Treasurer Michael Costa argued in full-page newspaper advertisements and on televised commercials that New South Wales consumers paid A$13 billion in GST but received only A$10 billion back from the Commonwealth Grants Commission, and as such he said that New South Wales was subsidising resource rich states like Queensland
and Western Australia
.
A Bill was introduced that gave The Federal Government No Obligation to hand back revenue, earned by that State,to be divided to other Non, Performing States. Unlike Sales Tax, Sales Tax revenue went back to the State that generated the sales tax.
The federal government counteracted with its own advertising campaign which claimed that New South Wales had breached its contractual obligations under the 1999 GST Agreement by continuing to charge unfair stamp duties and land taxes, which were supposed to have been abolished. After weeks of intense media and public pressure, the New South Wales State Government announced in its Budget that it would reduce stamp duty and land tax, but critics argued that the State Government did not go far enough with much broader tax reform in New South Wales required to help encourage investment and business that had been forced elsewhere due to an unfavourable New South Wales business environment. This was in response to the Commonwealth allowing another A$72 million in grants to New South Wales, in addition to existing annual increases.
, which has a more pronounced effect on lower income earners, meaning that the tax consumes a higher proportion of their income, compared to those earning large incomes. Due to the corresponding reductions in personal income taxes, state banking taxes, federal wholesales tax and some fuel taxes that were implemented when the GST was introduced, Treasurer
Peter Costello
claimed that people were effectively paying no extra tax.
The preceding months before the GST became active saw a spike in consumption as consumers rushed to purchase goods that they perceived would be substantially more expensive with the GST. Once the tax came into effect, consumer consumption and economic growth declined such that by the first fiscal quarter of 2001, the Australian economy recorded negative economic growth for the first time in more than 10 years. Consumption soon returned to normal however. The Government was criticised by small business owners over the increased administrative responsibilities of submitting Business Activity Statement
s (BAS) on a quarterly basis to the Australian Taxation Office
.
A study commissioned by the Curtin University of Technology
, Perth
in 2000 argued that the introduction of the GST would negatively impact the real estate market as it would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. The real estate market returned to boom between 2002 and 2004 where property prices and demand increased dramatically, particularly in Sydney
and Melbourne
. During the 2004-2006 period Perth
also witnessed a sharp climb in real estate prices and demand.
Following the introduction of the GST, a receipt for goods with a combined total over A$300 is eligible for a refund of any GST paid upon exiting the country with refunds claimed at a TRS (Tourist Refund Scheme) counter at the airport. The advantage of this arrangement is that goods purchased up to a month prior to departure may be freely used within Australia prior departure as long as they are carried in hand luggage and presented when making a refund claim. This obviously does not extend to consumable goods such as food and beverages, or any services such as plane tickets or hotel room charges.
Taxable supplies include goods wholly within Australia, from or to Australia or real property in Australia. Certain types of supplies are free of GST, examples include fresh unprocessed food, medical services, education courses, childcare, exports, pre-owned real estate and going concerns. When an enterprise purchases goods or services to be consumed or used for resupply to an end customer they may receive a refund (input tax credit) on the amount of GST contained in the price (Div 11), which means in effect no GST is paid on those supplies.
New residential and commercial properties are subject to GST but re-sale of existing properties is not. All real estate agent fees on either new or second-hand property are subject to GST. Processed foods such as biscuits, soft drinks, restaurant meals and take-a-way foods are also subject to GST.
Registered enterprises for GST must complete a Business Activity Statement (BAS) for reporting to the Australian Taxation Office for each quarter ending March, June, September and December. Businesses must lodge their Statements with the ATO within twenty working days of the end of each quarter.
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
. It is a value added tax
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
, not a sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
, in that it is refunded to all parties in the chain of production other than the final consumer.
It was introduced by the Howard Government
Howard Government
The Howard Government refers to the federal Executive Government of Australia led by Prime Minister John Howard. It was made up of members of the Liberal–National Coalition, which won a majority of seats in the Australian House of Representatives at four successive elections. The Howard Government...
on 1 July 2000, replacing the previous Federal wholesale sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
system and designed to phase out a number of various State and Territory Government taxes, duties and levies such as banking taxes and stamp duty
Stamp duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty...
.
1980s
The idea for a broad-based consumption taxConsumption tax
A consumption tax is a tax on spending on goods and services. The tax base of such a tax is the money spent on consumption. Consumption taxes are usually indirect, such as a sales tax or a value added tax...
was first proposed by then federal treasurer Paul Keating
Paul Keating
Paul John Keating was the 24th Prime Minister of Australia, serving from 1991 to 1996. Keating was elected as the federal Labor member for Blaxland in 1969 and came to prominence as the reformist treasurer of the Hawke Labor government, which came to power at the 1983 election...
at the 1985 Tax Summit but was dropped at the behest of then Labor
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
Prime Minister Bob Hawke
Bob Hawke
Robert James Lee "Bob" Hawke AC GCL was the 23rd Prime Minister of Australia from March 1983 to December 1991 and therefore longest serving Australian Labor Party Prime Minister....
after pressure from the ACTU
Australian Council of Trade Unions
The Australian Council of Trade Unions is the largest peak body representing workers in Australia. It is a national trade union centre of 46 affiliated unions.-History:The ACTU was formed in 1927 as the "Australian Council of Trade Unions"...
, welfare groups and business, which did not like its association with proposals for capital gains
Capital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...
and fringe benefits taxes.
1990s
The idea was refloated in 1991 by the opposition Liberal-National CoalitionCoalition (Australia)
The Coalition in Australian politics refers to a group of centre-right parties that has existed in the form of a coalition agreement since 1922...
, and was the centrepiece of the opposition's "Fightback!
Fightback!
Fightback! was a radical economic policy package, 650 pages long, proposed by then Liberal Party leader John Hewson.-Key elements:The key elements of Fightback! were:...
" platform at the 1993 election, when Keating was Prime Minister. The opposition had difficulty explaining the policy, as illustrated in leader Dr John Hewson
John Hewson
John Robert Hewson AM is an Australian economist, company director and a former politician. He was federal leader of the Liberal Party of Australia from 1990 to 1994 and led the party to defeat at the 1993 federal election.-Early life:...
's Birthday Cake Interview
Birthday Cake Interview
The "birthday cake interview" was a famous political interview in Australia that was carried out between interviewer Mike Willesee and Liberal Party Opposition Leader Dr. John Hewson shortly before the 1993 federal election...
, and Keating's campaign exploited public distrust of the GST. The GST was to varying degrees considered a factor in the opposition's surprise election loss of the 'unloseable election' in 1993. In 1994 The Liberals decided to discard the remnants of Fightback and Alexander Downer
Alexander Downer
Alexander John Gosse Downer is a former Australian Liberal Party politician who was Foreign Minister of Australia from March 1996 to December 2007, the longest-serving in Australian history...
replaced Dr Hewson as Liberal leader.
John Howard
John Howard
John Winston Howard AC, SSI, was the 25th Prime Minister of Australia, from 11 March 1996 to 3 December 2007. He was the second-longest serving Australian Prime Minister after Sir Robert Menzies....
was re-elected leader of the Liberal party in 1995, and pledged "never, ever" to introduce the GST. Howard led the Liberal-National Coalition to a large victory in the 1996 elections.
Still, before the 1998 election, Howard proposed a GST that would replace all sales taxes, as well as applying to all goods and services. The Howard Government
Howard Government
The Howard Government refers to the federal Executive Government of Australia led by Prime Minister John Howard. It was made up of members of the Liberal–National Coalition, which won a majority of seats in the Australian House of Representatives at four successive elections. The Howard Government...
finished on a two-party-preferred vote
Two-party-preferred vote
In politics, the two-party-preferred vote , or two-candidate-preferred vote , in an election or opinion poll uses preferential voting to express the electoral result after the distribution of preferences...
of 49.02% at the election, suffering a swing of 4.61% to Labor on 50.98%. However, the incumbent government retained a parliamentary majority of seats in the lower house. Howard described the election win as a "mandate for the GST". Lacking a Senate
Australian Senate
The Senate is the upper house of the bicameral Parliament of Australia, the lower house being the House of Representatives. Senators are popularly elected under a system of proportional representation. Senators are elected for a term that is usually six years; after a double dissolution, however,...
majority, and with Labor opposed to the introduction of the GST, the government turned to the minor parties such as the Australian Democrats
Australian Democrats
The Australian Democrats is an Australian political party espousing a socially liberal ideology. It was formed in 1977, by a merger of the Australia Party and the New LM, after principals of those minor parties secured the commitment of former Liberal minister Don Chipp, as a high profile leader...
for support.
A prominent selling point of the legislation was that all revenues raised by the GST would be distributed to the states. As such, an agreement was enacted with the state and territory governments of Australia in 1999 that their various duties, levies and taxes on consumption would be removed gradually over time, with the budget shortfall being replaced by GST income from the Commonwealth Grants Commission
Commonwealth Grants Commission
The Commonwealth Grants Commission is an Australian government body that advises on Australian Government financial assistance to the states and territories of Australia with the aim of achieving Horizontal Fiscal Equalisation....
. Furthermore, (federally levied) personal income tax and company tax was reduced to offset the GST.
During the 1998 election campaign, the Democrats
Australian Democrats
The Australian Democrats is an Australian political party espousing a socially liberal ideology. It was formed in 1977, by a merger of the Australia Party and the New LM, after principals of those minor parties secured the commitment of former Liberal minister Don Chipp, as a high profile leader...
leader Meg Lees
Meg Lees
Meg Heather Lees was a member of the Australian Senate from 1990 to 2005, representing the state of South Australia. She represented the Australian Democrats from 1990 to 2002, and was an independent senator between 2002 and 2005, adopting the party designation Australian Progressive Alliance from...
stated that her party was opposed to the GST unless food, books and tourism packages sold offshore were exempt and other tax measures were implemented. The government initially stated that these exemptions were not possible and looked more likely to win a compromise with independent Senator Brian Harradine
Brian Harradine
Richard William Brian Harradine , Australian politician, was an independent member of the Australian Senate from 1975 to 2005, representing the state of Tasmania. He was the longest-serving independent federal politician in Australian history, and a Father of the Senate.He was born in Quorn, South...
, but eventually a compromise was reached with Lees, including most basic food items being exempt from the GST, library purchases of books being refunded the GST, a temporary 8% refund on school textbooks, increases to welfare payments, and greater powers to the ACCC
Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission is an independent authority of the Australia government. It was established in 1995 with the amalgamation of the Australian Trade Practices Commission and the Prices Surveillance Authority to administer the Trade Practices Act 1974...
. A proposal was made to exempt tampon
Tampon
A tampon is a mass of cotton or rayon or a mixture of the two inserted into a body cavity or wound to absorb bodilyfluid. The most common type in daily use is designed to be inserted into the vagina during menstruation to absorb the flow of menstrual fluid...
s from the GST but it was dismissed by the Prime Minister. The legislation was passed on 28 June 1999 as A New Tax System (Goods and Services Tax) Act 1999. It gained assent on 8 July 1999 and came into operation on 1 July 2000.
Political impact
John Howard had said that the "GST would never become part of Liberal Party policy", but his change of heart would become apparent in the lead-up to the 1998 campaign. It was passed by the Senate in June 1999 in a heavily amended form. The Leader of the Democrats, Meg LeesMeg Lees
Meg Heather Lees was a member of the Australian Senate from 1990 to 2005, representing the state of South Australia. She represented the Australian Democrats from 1990 to 2002, and was an independent senator between 2002 and 2005, adopting the party designation Australian Progressive Alliance from...
, viewed the dilution of the GST legislation as a success, but the issue split the Democrats, with Senators Natasha Stott Despoja
Natasha Stott Despoja
Natasha Jessica Stott Despoja AM is an Australian former politician and former leader of the Australian Democrats. She was a Democrats senator for South Australia from 1995 to 2008...
and Andrew Bartlett
Andrew Bartlett
Andrew John Julian Bartlett is an Australian politician. He was formerly an Australian Democrats member of the Australian Senate from 1997 to 2008, representing the state of Queensland. He was the leader of the Democrats from 2002 to 2004, and deputy leader from 2004 to 2008.-Early life and...
crossing the floor
Crossing the floor
In politics, crossing the floor has two meanings referring to a change of allegiance in a Westminster system parliament.The term originates from the British House of Commons, which is configured with the Government and Opposition facing each other on rows of benches...
to vote against the GST. The move triggered infighting amongst the Democrats, and while the Democrats performed reasonably well in the 2001 federal election when Stott Despoja was party leader, the infighting worsened, resulting in Stott Despoja being forced out of the leadership and the loss, at the 2004 federal election, of the balance of power they once held in the Senate. The annihilation of the Democrats was completed at the following election in 2007 when they lost all their remaining seats, with the Australian Greens
Australian Greens
The Australian Greens, commonly known as The Greens, is an Australian green political party.The party was formed in 1992; however, its origins can be traced to the early environmental movement in Australia and the formation of the United Tasmania Group , the first Green party in the world, which...
becoming the major third party.
Australian Labor Party leader Kim Beazley
Kim Beazley
In the October 1998 election, Labor polled a majority of the two-party vote and received the largest swing to a first-term opposition since 1934. However, due to the uneven nature of the swing, Labor came up eight seats short of making Beazley Prime Minister....
continued to oppose it during the Howard government's second term. During the 2001 election campaign, Labor made a 'GST rollback' a centrepiece of its election platform. Labor attempted to reprise the effects of the birthday cake interview by deriding the application of GST to cooked and uncooked chickens, but failed to ignite public response to the limited scope of the rollbacks applying only to gas and electricity bills. Labor lost the election, and though the 11 September attacks and the so-called Tampa affair
Tampa affair
In August 2001, the Howard Government of Australia refused permission for the Norwegian freighter MV Tampa, carrying 438 rescued Afghans from a distressed fishing vessel in international waters, to enter Australian waters...
dominated the campaign, the loss would effectively end all serious opposition to the GST.
In early 2006, the New South Wales
New South Wales
New South Wales is a state of :Australia, located in the east of the country. It is bordered by Queensland, Victoria and South Australia to the north, south and west respectively. To the east, the state is bordered by the Tasman Sea, which forms part of the Pacific Ocean. New South Wales...
State Government and the Federal Treasurer Peter Costello
Peter Costello
Peter Howard Costello AC is an Australian politician and lawyer who served as the Treasurer in the Australian government from 1996 to 2007. He is the longest-serving Treasurer in Australian history. Costello was a Member of the Australian House of Representatives from 1990 to 2009, representing...
launched adversarial advertising campaigns concerning distribution of the GST to the states. New South Wales Treasurer Michael Costa argued in full-page newspaper advertisements and on televised commercials that New South Wales consumers paid A$13 billion in GST but received only A$10 billion back from the Commonwealth Grants Commission, and as such he said that New South Wales was subsidising resource rich states like Queensland
Queensland
Queensland is a state of Australia, occupying the north-eastern section of the mainland continent. It is bordered by the Northern Territory, South Australia and New South Wales to the west, south-west and south respectively. To the east, Queensland is bordered by the Coral Sea and Pacific Ocean...
and Western Australia
Western Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
.
A Bill was introduced that gave The Federal Government No Obligation to hand back revenue, earned by that State,to be divided to other Non, Performing States. Unlike Sales Tax, Sales Tax revenue went back to the State that generated the sales tax.
The federal government counteracted with its own advertising campaign which claimed that New South Wales had breached its contractual obligations under the 1999 GST Agreement by continuing to charge unfair stamp duties and land taxes, which were supposed to have been abolished. After weeks of intense media and public pressure, the New South Wales State Government announced in its Budget that it would reduce stamp duty and land tax, but critics argued that the State Government did not go far enough with much broader tax reform in New South Wales required to help encourage investment and business that had been forced elsewhere due to an unfavourable New South Wales business environment. This was in response to the Commonwealth allowing another A$72 million in grants to New South Wales, in addition to existing annual increases.
Economic and social effects
Critics have argued that the GST is a regressive taxRegressive tax
A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. "Regressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, where the average tax rate exceeds the...
, which has a more pronounced effect on lower income earners, meaning that the tax consumes a higher proportion of their income, compared to those earning large incomes. Due to the corresponding reductions in personal income taxes, state banking taxes, federal wholesales tax and some fuel taxes that were implemented when the GST was introduced, Treasurer
Treasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...
Peter Costello
Peter Costello
Peter Howard Costello AC is an Australian politician and lawyer who served as the Treasurer in the Australian government from 1996 to 2007. He is the longest-serving Treasurer in Australian history. Costello was a Member of the Australian House of Representatives from 1990 to 2009, representing...
claimed that people were effectively paying no extra tax.
The preceding months before the GST became active saw a spike in consumption as consumers rushed to purchase goods that they perceived would be substantially more expensive with the GST. Once the tax came into effect, consumer consumption and economic growth declined such that by the first fiscal quarter of 2001, the Australian economy recorded negative economic growth for the first time in more than 10 years. Consumption soon returned to normal however. The Government was criticised by small business owners over the increased administrative responsibilities of submitting Business Activity Statement
Business Activity Statement
The Business Activity Statement is a form submitted to the Australian Taxation Office by all businesses to report their taxation obligations....
s (BAS) on a quarterly basis to the Australian Taxation Office
Australian Taxation Office
The Australian Taxation Office is an Australian Government statutory agency and the principal revenue collection body for the Australian Government. The ATO has responsibility for administering the Australian federal taxation system and superannuation legislation...
.
A study commissioned by the Curtin University of Technology
Curtin University of Technology
Curtin University is an Australian university based in Perth, Western Australia, with additional campuses in regional Western Australia and at Miri , Sydney and Singapore...
, Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
in 2000 argued that the introduction of the GST would negatively impact the real estate market as it would add up to 8 percent to the cost of new homes and reduce demand by about 12 percent. The real estate market returned to boom between 2002 and 2004 where property prices and demand increased dramatically, particularly in Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
and Melbourne
Melbourne
Melbourne is the capital and most populous city in the state of Victoria, and the second most populous city in Australia. The Melbourne City Centre is the hub of the greater metropolitan area and the Census statistical division—of which "Melbourne" is the common name. As of June 2009, the greater...
. During the 2004-2006 period Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
also witnessed a sharp climb in real estate prices and demand.
Tourist refund scheme
Before the introduction of the GST, goods could be purchased from suppliers offering duty free pricing upon presentation of a current passport and airline tickets. The goods would then remain sealed until the passenger had passed through the customs area at an airport.Following the introduction of the GST, a receipt for goods with a combined total over A$300 is eligible for a refund of any GST paid upon exiting the country with refunds claimed at a TRS (Tourist Refund Scheme) counter at the airport. The advantage of this arrangement is that goods purchased up to a month prior to departure may be freely used within Australia prior departure as long as they are carried in hand luggage and presented when making a refund claim. This obviously does not extend to consumable goods such as food and beverages, or any services such as plane tickets or hotel room charges.
Legal framework
Division 9 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) stipulates that GST is applicable to a supply of goods, services and transactions related to real property, obligations or rights. The supply must be for consideration (GST Act s9-15) to a relevant entity registered for GST (Div 23) in the course of enterprise (s9-20). This does not include employment or hobby income.Taxable supplies include goods wholly within Australia, from or to Australia or real property in Australia. Certain types of supplies are free of GST, examples include fresh unprocessed food, medical services, education courses, childcare, exports, pre-owned real estate and going concerns. When an enterprise purchases goods or services to be consumed or used for resupply to an end customer they may receive a refund (input tax credit) on the amount of GST contained in the price (Div 11), which means in effect no GST is paid on those supplies.
New residential and commercial properties are subject to GST but re-sale of existing properties is not. All real estate agent fees on either new or second-hand property are subject to GST. Processed foods such as biscuits, soft drinks, restaurant meals and take-a-way foods are also subject to GST.
Registered enterprises for GST must complete a Business Activity Statement (BAS) for reporting to the Australian Taxation Office for each quarter ending March, June, September and December. Businesses must lodge their Statements with the ATO within twenty working days of the end of each quarter.
GST Statistics
Statistics on the GST can be found in publications of the Australian Taxation Office. These are the Annual Report and Taxation Statistics.See also
- Goods and Services Tax (Canada)Goods and Services Tax (Canada)The Goods and Services Tax is a multi-level value added tax introduced in Canada on January 1, 1991, by then Prime Minister Brian Mulroney and his finance minister Michael Wilson. The GST replaced a hidden 13.5% Manufacturers' Sales Tax ; Mulroney claimed the GST was implemented because the MST...
- Goods and Services Tax (Hong Kong)Goods and Services Tax (Hong Kong)Goods and Services Tax was a proposed Value Added Tax in Hong Kong. Consultation over a period of nine months was launched on 2006-07-19 and stirred considerable controversy....
- Goods and Services Tax (India)Goods and Services Tax (India)The Goods and Services Tax is a value added tax to be implemented in India by April 2012. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments...
- Goods and Services Tax (New Zealand)Goods and Services Tax (New Zealand)Goods and Services Tax is a value added tax introduced in New Zealand on 1 October 1986 at 10%. It later increased to 12.5% on 1 July 1989 and was further increased to 15% on 1 October 2010....
- Goods and Services Tax (Singapore)Goods and Services Tax (Singapore)Goods and Services Tax in Singapore is a broad-based value added tax levied on import of goods, as well as nearly all supplies of goods and services. The only exemptions are for the sales and leases of residential properties and most financial services...
External links
- The legislation: A New Tax System (Goods and Services Tax) Act 1999
- Australian Tax Office