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Thursday, 25 November 1999
Page: 12648


Mr SLIPPER (12:56 PM) —by leave—I move:

(1) Clause 2, page 2 (after line 28), after subclause (7), insert:

Schedule 4B—Diesel Fuel Rebate Scheme

(7A) Schedule 4B commences immediately after the commencement of the Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999 .

(2) Clause 2, page 2, (lines 30 to 32), omit subclause (8), substitute:

(8) Schedules 5 and 6 (other than items 1A to 2A of Schedule 6) commence immediately after the commencement of the A New Tax System (Goods and Services Tax) Act 1999 .

(9) Items 1A to 2A of Schedule 6 commence immediately after the commencement of Schedule 3 to the A New Tax System (Indirect Tax and Consequential Amendments) Act 1999 .

(3) Schedule 1, page 4 (after line 4), before item 1, insert:

1A After subsection 9-15(2)

Insert:

(2A) It does not matter:

(a) whether the payment, act or forbearance was in compliance with an order of a court, or of a tribunal or other body that has the power to make orders; or

(b) whether the payment, act or forbearance was in compliance with a settlement relating to proceedings before a court, or before a tribunal or other body that has the power to make orders.

(2B) For the avoidance of doubt, the fact that the supplier is a body of which the *recipient of the supply is a member, or that the supplier is a body that only makes supplies to its members, does not prevent the payment, act or forbearance from being consideration.

1B Paragraph 9-15(3)(c)

Omit "an *Australian government agency to another Australian government agency", substitute "a *government related entity to another government related entity".

(4) Schedule 1, page 4, after proposed new item 1B, insert:

1C At the end of section 9-20

Add:

(3) For the avoidance of doubt, the fact that activities of a body are limited to making supplies to members of the body does not prevent those activities being in the form of an adventure or concern in the nature of trade within the meaning of paragraph (1)(b).

(5) Schedule 1, item 1, page 4 (lines 5 and 6), omit the item, substitute:

1 Subsections 9-30(1) and (2)

Repeal the subsections, substitute:

GST-free

(1) A supply is GST-free if:

(a) it is GST-free under Division 38 or under a provision of another Act; or

(b) it is a supply of a right to receive a supply that would be GST-free under paragraph (a).

Input taxed

(2) A supply is input taxed if:

(a) it is input taxed under Division 40 or under a provision of another Act; or

(b) it is a supply of a right to receive a supply that would be input taxed under paragraph (a).

Note: If a supply is input taxed, there is no entitlement to an input tax credit for the things that are acquired or imported to make the supply (see sections 11-15 and 15-10).

(6) Schedule 1, item 3, page 4 (lines 10 to 12), omit the item, substitute:

3 Section 9-39 (at the end of the table)

Add:

13 Telecommunication supplies Division 85

14 Vouchers Division 100

(7) Schedule 1, page 4 (after line 12), after item 3, insert:

3A At the end of section 11-30

Add:

(5) The Commissioner may determine, in writing, one or more ways in which to work out, for the purpose of subsection (3), the extent to which a *creditable acquisition is for a *creditable purpose.

(8) Schedule 1, page 4, after proposed new item 3A, insert:

3B At the end of section 15-25

Add:

(4) The Commissioner may determine, in writing, one or more ways in which to work out, for the purpose of subsection (3), the extent to which an importation is for a *creditable purpose.

(9) Schedule 1, page 4, after proposed new item 3B, insert:

3C Section 17-99 (after table item 5)

Insert:

5A Goods applied solely to private or domestic use Division 130

3D Section 17-99 (after table item 9)

Insert:

9A Non-profit sub-entities Division 63

3E Section 17-99 (after table item 12A)

Insert:

12B Stock on hand on becoming registered etc. Division 137

3F Section 17-99 (at the end of the table)

Add:

16 Vouchers Division 100

(10) Schedule 1, page 4, after proposed new item 3F, insert:

3G Paragraph 19-40(c)

Repeal the paragraph, substitute:

(c) as a result of those adjustment events, the *previously attributed GST amount for the supply (if any) no longer correctly reflects the amount of GST (if any) on the supply (the corrected GST amount ), taking into account any change of circumstances that has given rise to an adjustment for the supply under this Subdivision or Division 21.

(11) Schedule 1, page 4, after proposed new item 3G, insert:

3H Paragraphs 19-45(b) and (c)

After "this Subdivision", insert "or Division 21".

(12) Schedule 1, page 4, after proposed new item 3H, insert:

3I Paragraph 19-70(c)

Omit "taking into account any adjustments for the acquisition", substitute "taking into account any change of circumstances that has given rise to an adjustment for the acquisition under this Subdivision or Division 21 or 129".

(13) Schedule 1, page 4, after proposed new item 3I, insert:

3J Paragraphs 19-75(b) and (c)

After "this Subdivision", insert "or Division 21 or 129".

(14) Schedule 1, page 4, after proposed new item 3J, insert:

3K At the end of Division 19

Add:

19-99 Special rules relating to adjustment events

Chapter 4 contains special rules relating to *adjustment events in particular cases, as follows:

Checklist of special rules

Item For this case . . . See

1 Insurance Division 78

(15) Schedule 1, page 4, after proposed new item 3K, insert:

3L Paragraph 21-5(1)(c)

Omit "due", substitute "*overdue".

3M Subsection 21-5(1)

Omit "due" (last occurring), substitute "overdue".

(16) Schedule 1, page 4, after proposed new item 3M, insert:

3N Paragraph 21-10(b)

Omit "due", substitute "*overdue".

(17) Schedule 1, page 4, after proposed new item 3N, insert:

3O Paragraph 21-15(1)(b)

Omit "due" (first occurring), substitute "*overdue".

3P Paragraph 21-15(1)(b)

Omit "due" (second occurring), substitute "overdue".

3Q Paragraph 21-15(1)(c)

Omit "due", substitute "overdue".

3R Subsection 21-15(1)

Omit "due" (last occurring), substitute "overdue".

(18) Schedule 1, page 4, after proposed new item 3R, insert:

3S Paragraph 21-20(b)

Omit "due", substitute "*overdue".

(19) Schedule 1, page 4, after proposed new item 3S, insert:

3T Section 21-99 (before table item 1)

Insert:

1A

Bad debts relating to partly taxable or creditable transactions

Division 136

(20) Schedule 1, item 4, page 4 (lines 13 to 15), omit the item, substitute:

4 Section 23-99 (before table item 1)

Insert:

1A

Government entities

Division 149

1B

Non-profit sub-entities

Division 63

(21) Schedule 1, page 4 (after line 18), after item 5, insert:

5A Section 25-49 (after table item 1)

Insert:

2

Non-profit sub-entities

Division 63

(22) Schedule 1, page 4 (after line 21), after item 6, insert:

6A Section 25-99 (after table item 1)

Insert:

1B

Non-profit sub-entities

Division 63

(23) Schedule 1, page 5 (after line 19), after item 13, insert:

13A Section 37-1 (after table item 3)

Insert:

3A

Bad debts relating to partly taxable or creditable transactions

Division 136

(24) Schedule 1, item 14, page 5 (lines 20 to 22), omit the item, substitute:

14 Section 37-1 (after table item 12)

Insert:

12A

Goods applied solely to private or domestic use

Division 130

12B

Government entities

Division 149

14A Section 37-1 (after table item 20)

Insert:

20A

Non-profit sub-entities

Division 63

14B Section 37-1 (after table item 29)

Insert:

29A

Stock on hand on becoming registered etc.

Division 137

(25) Schedule 1, page 5 (after line 25), after item 15, insert:

15A Section 37-1 (at the end of the table)

Add:

38

Vouchers

Division 100

(26) Schedule 1, page 5, after proposed new item 15A, insert:

15B Paragraph 38-7(2)(a)

Omit "and (f)", substitute ", (f) and (g)".

(27) Schedule 1, page 5, after proposed new item 15B, insert:

15C At the end of section 38-190

Add:

(3) Without limiting subsection (2), a supply covered by item 2 in that table is not GST-free if:

(a) it is a supply under an agreement entered into, whether directly or indirectly, with a *non-resident; and

(b) the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

(28) Schedule 1, page 6 (after line 9), after item 16, insert:

16A Subsection 38-475(1)

Repeal the subsection, substitute:

(1) The supply of a freehold interest in, or the *long term lease of, *potential residential land is GST-free if:

(a) the land is subdivided from land on which a *farming business has been *carried on for at least 5 years; and

(b) the supply is made to an *associate of the supplier of the land without *consideration or for consideration that is less than the *GST inclusive market value of the supply.

(29) Schedule 1, page 6, after proposed new item 16A, insert:

16B Section 38-480

Repeal the section, substitute:

38-480 Farm land supplied for farming

The supply of a freehold interest in, or the *long term lease of, land is GST-free if:

(a) the land is land on which a *farming business has been *carried on for at least the period of 5 years preceding the supply; and

(b) the *recipient of the supply intends that a farming business be carried on, on the land.

(30) Schedule 1, page 6, after proposed new item 16B, insert:

16C At the end of Division 38

Add:

Subdivision 38-Q—International mail

38-540 International mail

A supply is GST-free if it is a supply of services to a foreign postal administration for:

(a) the delivery in Australia; or

(b) the transit through Australia;

of postal articles mailed outside Australia.

(31) Schedule 1, page 6 (after line 14), after item 18, insert:

18A Subsection 42-5(1)

Omit "17,", substitute "4, 8, 15,"

18B After subsection 42-5(1A)

Insert:

(1B) An importation of goods is a non-taxable importation if the goods are covered by item 17 in Schedule 4 to the Customs Tariff Act 1995 and:

(a) the importer is the manufacturer of the goods; or

(b) the importer has previously acquired the goods, and the supply by means of which the importer acquired the goods was a *taxable supply (or would have been a taxable supply but for section 66-45); or

(c) the importer has previously imported the goods, and the previous importation was a *taxable importation.

(1C) An importation of goods is a non-taxable importation if the goods are covered by:

(a) item 1A, 1B, 1C, 1D, 1E, 5, 6, 9 or 16 in Schedule 4 to the Customs Tariff Act 1995 ; and

(b) regulations made for the purposes of this subsection.

(32) Schedule 1, page 6, after proposed new item 18B, insert:

18C Section 42-15

Repeal the section.

(33) Schedule 1, item 20, page 6 (line 25), omit "or acquisition", substitute ", acquisition or importation".

(34) Schedule 1, item 20, page 7 (lines 1 to 5), omit subsection (2), substitute:

(2) In relation to the first GST group, this section has effect despite section 48-50 (which is about who has adjustments for a GST group).

(35) Schedule 1, page 7 (after line 33), after item 20, insert:

20A Section 51-1

Omit "other".

(36) Schedule 1, page 7, after proposed new item 20A, insert:

20B Paragraph 51-5(1)(d)

Omit "the companies", substitute "those companies".

20C Paragraph 51-5(1)(e)

Repeal the paragraph, substitute:

(e) the application nominates one of those companies, or another company, to be the *joint venture operator of the joint venture; and

(f) if the nominated joint venture operator is not a party to the joint venture agreement—the nominated joint venture operator satisfies the requirements of paragraphs 51-10(c) and (f).

(37) Schedule 1, page 7, after proposed new item 20C, insert:

20D Subsections 51-30(1) and (2)

Omit "another", substitute "another *company that is a".

20E Paragraphs 51-30(1)(b) and (2)(b)

Omit "other".

(38) Schedule 1, page 7, after proposed new item 20E, insert:

20F Subsection 51-35(1)

Omit "another", substitute "another *company that is a".

20G Paragraph 51-35(1)(b)

Omit "other".

(39) Schedule 1, page 7, after proposed new item 20G, insert:

20H Subsection 51-40(1)

Omit "another", substitute "another *company that is a".

20I Paragraph 51-40(1)(a)

Omit "other".

20J Paragraph 51-40(1)(b)

Repeal the paragraph, substitute:

(b) the *company that is the joint venture operator at the time the adjustment arises had the adjustment.

(40) Schedule 1, page 7, after proposed new item 20J, insert:

20K Paragraph 51-45(2)(a)

Omit "another", substitute "another *company that is a".

20L Paragraphs 51-45(2)(b) and (c)

Omit "another", substitute "another company that is a".

(41) Schedule 1, page 7, after proposed new item 20L, insert:

20M Paragraph 51-70(1)(c)

Repeal the paragraph, substitute:

(c) approve another company that satisfies the requirements of paragraphs 51-10(c) and (f) as the joint venture operator of the joint venture.

20N Subsection 51-70(2)

Repeal the subsection, substitute:

(2) The Commissioner must revoke the approval of:

(a) one of the *participants of a *GST joint venture if satisfied that the participant does not *satisfy the participation requirements of the GST joint venture; or

(b) the *joint venture operator of a GST joint venture if satisfied that the operator does not satisfy the requirements of paragraphs 51-10(c) and (f).

Note: Revoking under this subsection an approval under this Division is a reviewable GST decision (see Division 7 of Part VI of the Taxation Administration Act 1953 ).

(42) Schedule 1, page 7, after proposed new item 20N, insert:

20O At the end of Division 51

Add:

Subdivision 51-D—Ceasing to be a participant in, or an operator of, a GST joint venture

51-110 Adjustments after you cease to be a participant in a GST joint venture

(1) If you *cease to be a participant in a GST joint venture, any *adjustment that arises afterwards in relation to a supply, acquisition or importation that the *joint venture operator made on your behalf in the course of activities for which the joint venture was entered into (other than a supply covered by subsection 51-30(2)):

(a) is an adjustment that you have; and

(b) is not an adjustment of the *company that is or was the joint venture operator.

(2) This section has effect despite section 51-40 (which is about who has adjustments for a GST joint venture).

51-115 Changes in extent of creditable purpose after you cease to be a member of a GST joint venture

(1) If:

(a) while you were a *participant in a *GST joint venture, you acquired or imported a thing by the joint venture operator acquiring or importing it on your behalf; and

(b) you *cease to be a participant in the GST joint venture;

then, when applying section 129-40 for the first time after that cessation, the *intended or former application of the thing is the extent of *creditable purpose last used to work out:

(c) under section 51-35, the amount of the input tax credit to which the *joint venture operator was entitled for the acquisition or importation; or

(d) under section 51-40, the amount of any *adjustment the joint venture operator had under Division 129 in relation to the acquisition or importation.

(2) If:

(a) while you were a *participant in a *GST joint venture, you acquired or imported a thing by the joint venture operator acquiring or importing it on your behalf; and

(b) you have *ceased to be a participant in the GST joint venture; and

(c) you have an *adjustment under Division 129 in relation to the acquisition or importation;

then, for the purposes of working out the full input tax credit in section 129-70 or 129-75, you are taken not to have been a participant of a GST joint venture when you acquired or imported the thing.

(43) Schedule 1, page 7, after proposed new item 20O, insert:

20P After Division 60

Insert:

Division 63—Non-profit sub-entities

63-1 What this Division is about

Some kinds of non-profit entities may choose to have some (or all) of their separately identifiable branches treated as separate entities for GST purposes.

Note: The parent entities then cease to be responsible, for GST purposes, for these branches. (By way of contrast, parent entities would remain responsible for their branches if they registered them under Division 54.)

63-5 Entities that may choose to apply this Division

(1) An entity may choose to apply this Division.

(2) However, the entity must be *registered and must be:

(a) a charitable institution, a trustee of a charitable fund or a *gift-deductible entity; or

(b) a non-profit body that is exempt from income tax under any of these provisions of the *ITAA 1997:

(i) section 50-5 (charity, education, science and religion);

(ii) section 50-10 (community service);

(iii) section 50-15 (employees and employers);

(iv) section 50-40 (primary and secondary resources, and tourism);

(v) item 9.1 or 9.2 of section 50-45 (sports, culture and recreation).

63-10 Period for which a choice has effect

(1) The choice has effect from the time the entity makes the choice.

(2) The choice ceases to have effect if:

(a) the entity revokes the choice; or

(b) the entity ceases to meet the requirements of subsection 63-5(2).

(3) However, the entity:

(a) cannot revoke the choice within 12 months after the day on which the entity made the choice; and

(b) cannot make a further choice within 12 months after the day on which the entity revoked a previous choice.

63-15 Consequences of choosing to apply this Division

(1) While the choice has effect, any branch of the entity is treated, for the purposes of the *GST law (other than sections 63-5 and 63-10 and this section), as an entity if that branch:

(a) maintains an independent system of accounting; and

(b) can be separately identified by reference to:

(i) the nature of the activities carried on through the branch; or

(ii) the location of the branch; and

(c) is referred to in the entity's records to the effect that it is to be treated as a separate entity for the purposes of the GST law.

(2) The branch's treatment as an entity ceases if:

(a) the choice ceases to have effect; or

(b) the branch ceases to meet the requirements of paragraphs (1)(a), (b) and (c).

However, if the branch is *registered, its treatment as an entity continues until its registration is cancelled.

(3) At all times during its treatment as an entity, the branch is a non-profit sub-entity .

63-20 Non-profit sub-entities may register

(1) A *non-profit sub-entity may apply to be *registered under section 23-10 even if it is not *carrying on an *enterprise and is not intending to carry on an enterprise.

(2) The Commissioner must *register the *non-profit sub-entity whether or not the Commissioner is satisfied that it is *carrying on an *enterprise or intending to carry on an enterprise.

(3) This section has effect despite section 23-10 (which is about who may be registered) and section 25-5 (which is about when the Commissioner must register an entity).

63-25 Registration turnover threshold for non-profit sub-entities

(1) The registration turnover threshold for a *non-profit sub-entity is:

(a) $50,000; or

(b) such higher amount as the regulations specify.

(2) This section has effect despite section 23-15 (which is about registration turnover thresholds).

63-30 When non-profit sub-entities must apply for cancellation of registration

(1) If a *non-profit sub-entity is *registered and it does not meet the requirements of paragraphs 63-15(1)(a), (b) and (c), it must apply to the Commissioner in the *approved form for cancellation of its *registration. It must lodge the application within 21 days after the day on which it ceased to meet those requirements.

(2) Section 25-50 (which is about cancelling registration) does not apply to *non-profit sub-entities.

63-35 When the Commissioner must cancel registration of non-profit sub-entities

(1) The Commissioner must cancel *registration of a *non-profit sub-entity (even if it has not applied for cancellation of the registration) if the Commissioner is satisfied that the sub-entity does not meet the requirements of paragraphs 63-15(1)(a), (b) and (c).

Note: Cancelling registration under this subsection is a reviewable GST decision (see Division 7 of Part VI of the Taxation Administration Act 1953 ).

(2) The Commissioner must notify the sub-entity if the Commissioner decides to cancel its registration. The notice must specify the date of effect of the cancellation.

(3) Subsection 25-55(2) (which is about cancelling registration) does not apply to *non-profit sub-entities.

63-40 Effect on adjustments of becoming a non-profit sub-entity

(1) If a branch of an entity becomes a *non-profit sub-entity, any *adjustment arising afterwards in relation to a supply, acquisition or importation, made by the entity through the branch before it became a non-profit sub-entity:

(a) is taken to be an adjustment that the non-profit sub-entity has, as if the non-profit sub-entity had made the supply, acquisition or importation; and

(b) is not taken to be an adjustment that the entity has.

(2) For the purpose of applying subsection (1) to an adjustment under Division 129 relating to a thing acquired or imported before the branch became a *non-profit sub-entity, that Division applies as if:

(a) the extent to which the acquisition or importation of the thing was for a *creditable purpose were the extent to which the non-profit sub-entity acquired or imported it for a creditable purpose; and

(b) the extent to which the thing has been *applied for a creditable purpose since its acquisition or importation were the extent to which the non-profit sub-entity applied it for a creditable purpose.

63-45 Effect on adjustments of ceasing to be a non-profit sub-entity

(1) If a branch of an entity ceases to be a *non-profit sub-entity, any *adjustment arising afterwards in relation to a supply, acquisition or importation, made by the branch while it was a non-profit sub-entity, is taken to be an adjustment that the entity has, as if the entity had made the supply, acquisition or importation.

(2) For the purpose of applying subsection (1) to an adjustment under Division 129 relating to a thing acquired or imported before the branch ceased to be a *non-profit sub-entity, that Division applies as if:

(a) the extent to which the acquisition or importation of the thing was for a *creditable purpose were the extent to which the entity acquired or imported it for a creditable purpose; and

(b) the extent to which the thing has been *applied for a creditable purpose since its acquisition or importation were the extent to which the entity applied it for a creditable purpose.

(44) Schedule 1, page 13 (after line 12), after item 30, insert:

30A At the end of section 70-20

Add:

(3) The Commissioner may determine, in writing, one or more ways in which to work out, for the purpose of subsection (2), the extent to which an acquisition is for a *creditable purpose.

(45) Schedule 1, page 13, after proposed new item 30A, insert:

30B At the end of section 72-5

Add:

(3) However, this section does not apply to any supply that is constituted by an insured entity settling a claim under an *insurance policy.

(46) Schedule 1, page 13, after proposed new item 30B, insert:

30C At the end of section 72-40

Add:

(3) However, this section does not apply to any acquisition that is constituted by an insurer settling a claim under an *insurance policy.

(47) Schedule 1, page 13, after proposed new item 30C, insert:

30D After subsection 75-10(3)

Insert:

(3A) If:

(a) the circumstances specified in item 4 in the second column of the table in subsection (3) apply to the supply; and

(b) there are improvements on the land or premises in question on the day on which the *taxable supply takes place;

the valuation is to be made as if there are no improvements on the land or premises on that day.

(48) Schedule 1, item 31, page 13 (lines 13 to 20), omit the item, substitute:

31 Section 78-1

Repeal the section, substitute:

78-1 What this Division is about

Stamp duty is not included in working out the GST on insurance premiums. Insurers have decreasing adjustments which enable the net GST on insurance to reflect correctly their margins after settlements of claims are taken into account.

(49) Schedule 1, items 32 to 40, page 13 (line 21) to page 15 (line 14), omit the items, substitute:

32 Subdivisions 78-A and 78-B

Repeal the Subdivisions, substitute:

Subdivision 78-A—Insurers

78-5 GST on insurance premiums is exclusive of stamp duty

(1) The *value of a *taxable supply of an *insurance policy is worked out as if the *price of the supply were reduced by the amount of any stamp duty payable under a *State law or *Territory law in respect of the supply.

(2) This section has effect despite section 9-75 (which is about the value of taxable supplies).

78-10 Decreasing adjustments for settlements of insurance claims

(1) An insurer has a decreasing adjustment if, in settlement of a claim under an *insurance policy, the insurer:

(a) makes a payment of *money; or

(b) makes a supply; or

(c) makes both a payment of money and a supply.

(2) However, this section only applies if:

(a) the supply of the *insurance policy by the insurer was solely or partly a *taxable supply; and

(b) either:

(i) there was no entitlement to an input tax credit for the premium paid in relation to the period during which the event giving rise to the claim happened; or

(ii) there was an entitlement to such an input tax credit, but the amount of the input tax credit was less than the GST payable by the insurer for the taxable supply; and

(c) the insurer settles the claim for a *creditable purpose; and

(d) the insurer is *registered, or *required to be registered; and

(e) the settlement does not relate solely to one or more *non-creditable insurance events.

(3) An event is a non-creditable insurance event if the supply of an *insurance policy would not be a *taxable supply if it were only an insurance policy against loss, damage, injury or risk that relates to that event happening.

78-15 How to work out the decreasing adjustments

No input tax credit for the premium

(1) If there was no entitlement to an input tax credit for the premium paid in relation to the period during which the event giving rise to the claim happened, the amount of the decreasing adjustment is 1/11 of the *settlement amount.

Partial input tax credit for the premium

(2) If there was an entitlement to such an input tax credit, the amount of the decreasing adjustment is as follows:

where:

extent of input tax credit is the amount of the input tax credit expressed as a fraction of the GST payable for the supply of the *insurance policy for the period to which the premium relates.

Note: There is no decreasing adjustment if there is a full input tax credit for the premium paid: see paragraph 78-10(2)(b).

Non-creditable insurance events

(3) The amount of the decreasing adjustment under subsection (1) or (2) is reduced to the extent (if any) that the settlement relates to one or more *non-creditable insurance events.

Settlement amounts

(4) The settlement amount is worked out using this method statement.

Method statement

Step 1. The sum of the payments of *money (if any) made in settlement of the claim is multiplied by the following:

where:

extent of input tax credit has the meaning given by subsection (2).

Step 2. The *GST inclusive market value of the supplies (if any) made by the insurer in settlement of the claim (other than supplies that would have been *taxable supplies but for section 78-25) is added to the step 1 amount.

Step 3. The sum of any payments of excess made to the insurer under the *insurance policy in question is subtracted from the step 2 amount.

78-20 Settlements of insurance claims do not give rise to creditable acquisitions

(1) If, in settlement of a claim under an *insurance policy, an insurer:

(a) makes a payment of *money; or

(b) makes a supply; or

(c) makes both a payment of money and a supply;

the payment or supply is not treated as *consideration for an acquisition made by the insurer.

(2) This section has effect despite section 11-5 (which is about what is a creditable acquisition).

78-25 Supplies in settlement of claims are not taxable supplies

(1) A supply that an insurer makes in settlement of a claim under an *insurance policy is not a *taxable supply.

(2) This section has effect despite section 9-5 (which is about what are taxable supplies).

78-30 Acquisitions of goods by insurers in the course of settling claims

(1) An acquisition of *goods is not a *creditable acquisition if:

(a) it is solely an acquisition made by an insurer for the purpose of supplying the goods in the course of settling a claim under an *insurance policy; and

(b) the supply of the insurance policy by the insurer was not a *taxable supply.

(2) This section has effect despite section 11-5 (which is about what is a creditable acquisition).

78-35 Taxable supplies relating to rights of subrogation

(1) If, in settlement of a claim made by an insurer in the insurer's exercising of rights of subrogation in respect of an *insurance policy, an entity that is not insured under the policy:

(a) makes a payment of *money; or

(b) makes a supply; or

(c) makes both a payment of money and a supply;

the payment or supply is not treated as *consideration for a supply made by the insurer (whether or not the payment or supply is made to the insurer) or by the entity insured.

(2) This section has effect despite section 9-15 (which is about consideration).

78-40 Adjustment events relating to decreasing adjustments under this Division

Division 19 applies in relation to a *decreasing adjustment that an insurer has under this Division as if:

(a) the adjustment were an input tax credit; and

(b) the settlement of the claim to which the adjustment relates were a *creditable acquisition that the insurer made; and

(c) any payment or supply made by another entity, in settlement of a claim made by an insurer in the insurer's exercising of rights of subrogation in respect of the *insurance policy in question, were a reduction in the *consideration for the acquisition.

Subdivision 78-B—Insured entities etc.

78-45 Settlements of insurance claims do not give rise to taxable supplies

(1) If, in settlement of a claim under an *insurance policy, an insurer:

(a) makes a payment of *money; or

(b) makes a supply; or

(c) makes both a payment of money and a supply;

the payment or supply is not treated as *consideration for a supply made by the entity insured, or by any entity (other than the entity insured) that was entitled to an input tax credit for the premium paid for the insurance policy.

(2) This section has effect despite section 9-15 (which is about consideration).

78-50 Settlements of insurance claims give rise to taxable supplies if entitlement to input tax credits is not disclosed

(1) However, the payment or supply is treated as *consideration for a supply made by an entity if:

(a) the entity paid all or a part of the premium, for the *insurance policy, relating to the period during which the event giving rise to the claim happened; and

(b) the entity was entitled to an input tax credit for the premium it paid; and

(c) the entity:

(i) did not, at or before the time the insurance policy was supplied, inform the insurer that the entity was entitled to an input tax credit for the premium it paid; or

(ii) in informing the insurer of the entitlement at or before that time, understated its extent.

It does not matter whether that entity is the entity insured, or whether the payment or supply is made to that entity or any other entity.

(2) The extent to which the payment or supply is treated as *consideration is the extent of the entitlement, or the extent to which the entitlement was understated, as the case requires.

(3) The supply made by the entity is a taxable supply whether or not the entity is *registered, or *required to be registered, at the time of the settlement or at the time of the payment or supply by the insurer.

Note: Subdivision 78-D deals with how GST applies to the taxable supply if the insured entity is not registered, or required to be registered.

(4) This section has effect despite section 9-5 (which is about what are taxable supplies) and section 9-15 (which is about consideration).

78-55 Payments of excess under insurance policies are not consideration for supplies

(1) The making of any payment by an entity is not treated as *consideration for a supply, to the entity or any other entity, to the extent that the payment is the payment of an excess to the insurer under an *insurance policy.

(2) This section has effect despite section 9-15 (which is about consideration).

78-60 Supplies of goods to insurers in the course of settling claims

(1) A supply of goods is not a *taxable supply if it is solely a supply made under an *insurance policy to an insurer in the course of settling a claim under the policy.

(2) In working out the value of a *taxable supply that is partly a supply of goods made under an *insurance policy to an insurer in the course of settling a claim under the policy, disregard the *consideration to the extent that it relates to the supply of those goods.

(3) This section has effect despite section 9-5 (which is about what are taxable supplies) and section 9-75 (which is about the value of taxable supplies).

(50) Schedule 1, item 41, page 15 (line 24), after "supply is", insert "not ".

(51) Schedule 1, item 41, page 15 (lines 26 to 31), omit subsections (2) and (3).

(52) Schedule 1, item 42, page 16 (line 3) to page 19 (line 9), omit the item, substitute:

42 Subsection 78-80(1)

Omit "section 78-30", substitute "section 78-50".

(53) Schedule 1, page 19 (after line 9), after item 42, insert:

42A Paragraph 78-85(1)(a)

Omit "section 78-30", substitute "section 78-50".

(54) Schedule 1, page 19, after proposed new item 42A, insert:

42B Paragraphs 78-90(1)(a) and (b)

Omit "section 78-30", substitute "section 78-50".

(55) Schedule 1, page 19, after proposed new item 42B, insert:

42C At the end of Division 78

Add:

Subdivision 78-E—Statutory compensation schemes

78-95 GST on premiums etc. under statutory compensation schemes is exclusive of stamp duty

(1) The *value of a *taxable supply of membership of, or participation in, a *statutory compensation scheme is worked out as if the *price of the supply were reduced by the amount of any stamp duty payable under a *State law or *Territory law in respect of the supply.

(2) This section has effect despite section 9-75 (which is about the value of taxable supplies).

78-100 Settlements of claims for compensation under statutory compensation schemes

(1) This Division applies in relation to a payment or supply made in settlement of a claim for compensation under a *statutory compensation scheme in the same way that it applies to a payment or supply made in settlement of a claim under an *insurance policy.

(2) For the purposes of the application of this Division in relation to such a payment or supply:

(a) the claim for compensation under the scheme is treated as a claim under an *insurance policy; and

(b) the entity operating the scheme is treated as the insurer; and

(c) an entity is treated as the entity insured if:

(i) the entity's payment of premiums, contributions or similar payments under the scheme, or payment of levy in connection with the scheme; or

(ii) the entity's liability to pay premiums, contributions or similar payments under the scheme, or liability to pay levy in connection with the scheme;

enabled the claim for compensation to arise; and

(d) the supply of membership of, or participation in, the scheme is treated as the supply of an *insurance policy.

78-105 Meaning of statutory compensation scheme

A statutory compensation scheme is a scheme or arrangement:

(a) that is established by an *Australian law; and

(b) under which compensation is payable for particular kinds of injury, loss or damage; and

(c) that is specified in the regulations, or that is of a kind specified in the regulations.

Subdivision 78-F—Miscellaneous

78-110 Effect of judgments and court orders

If:

(a) in compliance with a judgment or order of a court relating to:

(i) a claim under an *insurance policy; or

(ii) a claim by an insurer in exercising rights of subrogation in respect of an insurance policy; or

(iii) a claim for compensation under a *statutory compensation scheme;

an entity makes a payment of *money, makes a supply, or makes both a payment of money and a supply; and

(b) had the payment or supply been made in the absence of such a judgment or order, it would have been a payment or supply made in settlement of the claim;

the payment or supply is treated as having been made in settlement of the claim.

78-115 Exclusion of certain Commonwealth, State or Territory insurance schemes

This Division (other than sections 78-5 and 78-95) does not apply to an *insurance policy, or to a payment or supply made in settlement of a claim made under an insurance policy, if:

(a) the policy was supplied under a scheme for insurance, or a *statutory compensation scheme, established by an *Australian law; and

(b) that scheme is of a kind specified in the regulations.

(56) Schedule 1, page 20 (after line 13), after item 44, insert:

44A After Division 99

Insert:

Division 100—Vouchers

100-1 What this Division is about

A supply of a voucher for supplies up to a stated monetary value is not subject to GST. GST may still be payable on the supply for which the voucher is redeemed, and there is an increasing adjustment for unredeemed vouchers.

Note: Vouchers that do not state a monetary value can be subject to GST when supplied, but the price of the voucher is excluded when working out the GST on the supply for which the voucher is redeemed (see paragraph 9-15(3)(a).

100-5 Supplies of vouchers stating monetary value

(1) A supply of a *voucher is not a *taxable supply if:

(a) on redemption of the voucher, the holder of the voucher is entitled to supplies up to a monetary value stated on the voucher; and

(b) the *consideration for supply of the voucher does not exceed that monetary value.

(2) If the *consideration for supply of the voucher exceeds that monetary value, the consideration is treated (except for the purposes of this section) as if it were reduced by that monetary value.

(3) This section has effect despite section 9-5 (which is about what are taxable supplies) and section 9-15 (which is about consideration).

100-10 Redemption of vouchers

(1) The act of redeeming a *voucher is not a supply.

Note: A supply for which the voucher is redeemed is still a supply.

(2) Subsection (1) has effect despite section 9-10 (which is about what is a supply).

(3) Paragraph 9-15(3)(a) (which is about the consideration for exercising rights or options) does not apply to a right or option that is granted by way of a *voucher if, on redemption of the voucher, the holder of the voucher is entitled to supplies up to a monetary value stated on the voucher.

100-15 Increasing adjustments for unredeemed vouchers

(1) You have an increasing adjustment if:

(a) you supplied a *voucher for *consideration; and

(b) on redemption of the voucher, the holder of the voucher was entitled to supplies up to a monetary value stated on the voucher; and

(c) the voucher has not been redeemed; and

(d) you have, for accounting purposes, written back to current income any reserves for the redemption of the voucher.

(2) The amount of the increasing adjustment is 1/11 of the amount written back to current income.

100-20 Vouchers supplied to non-residents and redeemed by others in Australia

This Division does not apply to a *voucher supplied to a *non-resident if, because of the application of subsection 38-190(3), the supply is not *GST-free.

100-25 Meaning of voucher

A voucher is any voucher, token, stamp, coupon or similar article the redemption of which in accordance with its terms entitles the holder to receive supplies in accordance with its terms. However, a postage stamp is not a voucher.

(57) Schedule 1, page 20 (after line 17), after item 45, insert:

45A At the end of Subdivision 129-A

Add:

129-15 Adjustments do not arise under this Division where there are adjustments under Division 130

Despite section 129-5, you cannot have an adjustment under this Division for an acquisition if you have already had an *adjustment under Division 130 (goods applied solely to private or domestic use) for the acquisition.

(58) Schedule 1, page 20, after proposed new item 45A, insert:

45B Subparagraph 129-20(1)(b)(ii)

Omit "ends" (second occurring).

(59) Schedule 1, page 20 (after line 27), after item 46, insert:

46A At the end of section 129-40

Add:

(3) If the thing is acquired through a *reduced credit acquisition and, at the time of the acquisition, it was wholly for a *creditable purpose because of Division 70, the extent to which it was acquired for a creditable purpose is the reduced input tax credit percentage prescribed for the purposes of subsection 70-5(2) for an acquisition of that kind.

(60) Schedule 1, page 20, after proposed new item 46A, insert:

46B Section 129-80 (heading)

Repeal the heading, substitute:

129-80 Effect of adjustment under Division 19 or 21

(61) Schedule 1, page 20, after proposed new item 46B, insert:

46C After Division 129

Insert:

Division 130—Goods applied solely to private or domestic use

130-1 What this Division is about

You may have an increasing adjustment if you apply solely to private or domestic use goods for which you had a full input tax credit.

130-5 Goods applied solely to private or domestic use

(1) You have an increasing adjustment if:

(a) you made a *creditable acquisition or *creditable importation of goods; and

(b) the acquisition or importation was solely for a *creditable purpose; and

(c) you *apply the goods solely to private or domestic use.

(2) The amount of the increasing adjustment is an amount equal to the amount of the input tax credit to which you were entitled for the acquisition or importation, taking account of any *adjustments for the acquisition or importation.

(3) However, this section does not apply if you have previously had an adjustment under Division 129 for the acquisition or importation.

(62) Schedule 1, page 20, after proposed new item 46C, insert:

46D After Division 135

Insert:

Division 136—Bad debts relating to partly taxable or creditable transactions

136-1 What this Division is about

If you have an adjustment under Division 21 for a bad debt relating to a supply that was partly taxable or an acquisition that was partly creditable, the amount of that adjustment is reduced under this Division.

136-5 Adjustments relating to partly taxable supplies

If you have an *adjustment under section 21-5 or 21-10 in relation to a supply that was partly a *taxable supply, the amount of that adjustment is reduced to the following amount:

where:

full adjustment is what would be the amount of the adjustment worked out under section 21-5 or 21-10 if this section did not apply.

taxable proportion is the proportion of the *value of the supply (worked out as if it were solely a taxable supply) that the taxable supply represents.

Example: If the amount of an adjustment under section 21-5 would be $100 but the supply was only 80% taxable, the amount of the adjustment is $80.

136-10 Adjustments in relation to partly creditable acquisitions

(1) If you have an *adjustment under section 21-15 or 21-20 in relation to a *creditable acquisition that was *partly creditable, the amount of that adjustment is reduced to the following amount:

where:

extent of consideration is the extent to which you provide, or are liable to provide, the *consideration for the acquisition, expressed as a percentage of the total consideration for the acquisition.

extent of creditable purpose is the extent of *creditable purpose last used to work out:

(a) the amount of the input tax credit for the acquisition; or

(b) the amount of any *adjustment under Division 129 in relation to the acquisition;

expressed as a percentage of the total purpose of the acquisition.

full adjustment is what would be the amount of the adjustment worked out under section 21-15 or 21-20 if this section did not apply.

(2) If you have an *adjustment under section 21-15 or 21-20 in relation to a *creditable acquisition that was a *reduced credit acquisition and that was not *partly creditable (that is, it is wholly for a *creditable purpose because of Division 70), the amount of that adjustment is reduced to the following amount:

where:

extent of consideration is the extent to which you provide, or are liable to provide, the *consideration for the acquisition, expressed as a percentage of the total consideration for the acquisition.

percentage credit reduction is the reduced input tax credit percentage prescribed for the purposes of subsection 70-5(2) for an acquisition of that kind.

full adjustment is what would be the amount of the adjustment worked out under section 21-15 or 21-20 if this section did not apply.

(63) Schedule 1, page 20, after proposed new item 46D, insert:

46E Before Division 138

Insert:

Division 137—Stock on hand on becoming registered etc.

137-1 What this Division is about

If you become registered or required to be registered, you may have a decreasing adjustment for stock you have already acquired.

137-5 Adjustments for stock on hand on becoming registered etc.

(1) You have a decreasing adjustment if:

(a) you become *registered or *required to be registered; and

(b) at that time, you hold stock for the purpose of sale or exchange, or for use as raw materials, in *carrying on your *enterprise; and

(c) you had acquired the stock solely or partly for a *creditable purpose.

(2) However, this section does not apply if:

(a) you were entitled to an input tax credit for the acquisition; and

(b) you have not had a *increasing adjustment under Division 138 (cessation of registration) relating solely or partly to the stock.

(3) The amount of the decreasing adjustment is an amount equal to what would have been the *previously attributed input tax credit amount for the acquisition if you had been *registered at the time of the acquisition.

(64) Schedule 1, page 23 (after line 8), after item 50, insert:

50A Subsection 156-5(1)

Omit "to one or more tax periods", substitute ", in accordance with section 29-5,".

50B Subsection 156-5(2)

Repeal the subsection, substitute:

(2) If the progressive or periodic components of such a supply are not readily identifiable, the components correspond to the proportion of the total *consideration for the supply that the separate amounts of consideration represent.

(65) Schedule 1, page 23, after proposed new item 50B, insert:

50C Subsection 156-10(1)

Omit "to one or more tax periods", substitute ", in accordance with section 29-10,".

50D Subsection 156-10(2)

Repeal the subsection, substitute:

(2) If the progressive or periodic components of such an acquisition are not readily identifiable, the components correspond to the proportion of the total *consideration for the acquisition that the separate amounts of consideration represent.

(66) Schedule 1, page 23, after proposed new item 50D, insert:

50E After section 177-10

Insert:

177-12 GST implications of references to price, value etc. in other Acts

(1) In any Act, unless the contrary intention appears, a reference to a *price relating to a supply, or proposed supply, is taken to include the *net GST (if any) that is, or would be, payable by an entity making the supply.

(2) Subsection (1) applies in relation to:

(a) any fee or charge made, or required to be made; or

(b) any *consideration provided, or required to be provided;

for or in connection with the supply in the same way that it applies to a *price relating to a supply.

(3) In any Act, unless the contrary intention appears, a reference to the value relating to a thing is taken not to include the GST (if any) that would be payable if an entity were to make a supply of the thing.

(4) This section does not apply to:

(a) this Act; or

(b) the Income Tax Assessment Act 1997 ; or

(c) the A New Tax System (Wine Equalisation Tax) Act 1999 ; or

(d) the A New Tax System (Luxury Car Tax) Act 1999 ; or

(e) Schedule 1 to the Taxation Administration Act 1953 ; or

(f) the Income Tax Assessment Act 1936 ; or

(g) the Fringe Benefits Tax Assessment Act 1986 ; or

(h) the Petroleum Resource Rent Tax Assessment Act 1987 .

(67) Schedule 1, page 23, after proposed new item 50E, insert:

50F At the end of section 184-1

Add:

Note: For GST purposes, non-profit sub-entities are treated as entities (see Division 63), and government entities can be treated as entities (see Division 149).

(68) Schedule 1, page 23, after proposed new item 50F, insert:

50G At the end of Division 184

Add:

184-5 Supplies etc. by partnerships and other unincorporated bodies

(1) For the avoidance of doubt, a supply, acquisition or importation made by or on behalf of a partner of a *partnership in his or her capacity as a partner:

(a) is taken to be a supply, acquisition or importation made by the partnership; and

(b) is not taken to be a supply, acquisition or importation made by that partner or any other partner of the partnership.

Note: Section 50 of the Taxation Administration Act 1953 deals with the liability of partners for the obligations imposed on a partnership under the GST law.

(2) For the avoidance of doubt, a supply, acquisition or importation made by or on behalf of one or more members of the committee of management of an unincorporated association or body of persons (other than a *partnership), in their capacity as members of that committee:

(a) is taken to be a supply, acquisition or importation made by the body; and

(b) is not taken to be a supply, acquisition or importation made by any members of the association or body.

Note: Section 52 of the Taxation Administration Act 1953 deals with the liability of members of committees of management for the obligations imposed on an unincorporated association or body of persons under the GST law.

(69) Schedule 1, page 23 (after line 14), after item 51, insert:

51A Section 195-1

Insert:

cease to be a participant of a GST joint venture means:

(a) your approval as a *participant of a *GST joint venture is revoked; or

(b) the approval of a GST joint venture of which you are a participant is revoked.

(70) Schedule 1, item 52, page 23 (lines 15 to 18), omit the item.

(71) Schedule 1, page 23 (after line 20), after item 53, insert:

53A Section 195-1 (note at the end of the definition of consideration )

Omit "78-30, 78-35", substitute "78-20, 78-35, 78-45, 78-50".

53B Section 195-1 (note at the end of the definition of consideration )

After "99-5", insert ", 100-5".

53C Section 195-1 (definition of creditable acquisition )

Omit "and subsection 78-5(2)".

53D Section 195-1 (note at the end of the definition of creditable acquisition )

Omit "78-15", substitute "78-30".

(72) Schedule 1, item 55, page 23 (table item 4A), omit the table item, substitute:

4A

Section 78-10

Payments or supplies made in settlement of insurance claims

(73) Schedule 1, page 23 (after line 26), after item 55, insert:

55A Section 195-1 (at the end of the table in the definition of decreasing adjustment )

Add:

7

Section 137-5

Stock on hand on becoming registered etc.

(74) Schedule 1, item 58, page 24 (line 11), omit "and", substitute "or".

(75) Schedule 1, item 58, page 24 (after line 15), at the end of the definition of government related entity , add:

; or (c) a local governing body established by or under a *State law or *Territory law.

(76) Schedule 1, page 25 (after line 3), after item 61, insert:

61A Section 195-1 (after table item 4 of the definition of increasing adjustment )

Insert:

4A

Section 100-15

Unredeemed vouchers

61B Section 195-1 (after table item 5 of the definition of increasing adjustment )

Insert:

5A

Section 130-5

Goods applied solely to private or domestic use

61C Section 195-1 (definition of insurance policy )

Repeal the definition, substitute:

insurance policy means a policy of insurance (or of reinsurance) against loss, damage, injury or risk of any kind, whether under a contract or a law. However, it does not include such a policy to the extent that it does not relate to insurance (or reinsurance) against loss, damage, injury or risk of any kind.

(77) Schedule 1, page 25 (after line 7), after item 62, insert:

62A Section 195-1 (definition of joint venture operator )

Omit "*participant of the joint venture nominated as mentioned in paragraph 51-5(e)", substitute "*company nominated to be the joint venture operator under paragraph 51-5(e)".

(78) Schedule 1, page 25 (after line 14), after item 64, insert:

64A Section 195-1

Insert:

net GST : the net GST that is or would be payable by an entity for a supply is:

(a) the GST that is or would be payable by the entity on the supply; plus

(b) the sum of any *increasing adjustments that the entity has or would have relating to the supply; minus

(c) the sum of any *decreasing adjustments that the entity has or would have relating to the supply.

64B Section 195-1

Insert:

overdue : a debt is overdue if there has been a failure to discharge the debt, and that failure is a breach of the debtor's obligations in relation to the debt.

64C Section 195-1

Insert:

non-profit sub-entity has the meaning given by subsection 63-15(3).

(79) Schedule 1, page 25 (after line 20), after item 66, insert:

66A Section 195-1 (paragraph (a) of the definition of pre-school course )

Repeal the paragraph, substitute:

(a) in accordance with a pre-school curriculum recognised by:

(i) the education authority of the State or Territory in which the course is delivered; or

(ii) a State or Territory body that has the responsibility for recognising pre-school curricula for courses delivered in that State or Territory; and

66B Section 195-1 (definition of registration turnover threshold )

Omit "section 23-15", substitute "sections 23-15 and 63-25".

(80) Schedule 1, page 25 (after line 27), after item 68, insert:

68A Section 195-1

Insert:

settlement amount has the meaning given by subsection 78-15(4).

(81) Schedule 1, item 69, page 26 (line 2), omit "78-135", substitute "78-105".

(82) Schedule 1, page 26 (after line 2), after item 69, insert:

69A Section 195-1 (definition of taxable supply )

Omit "78-30", substitute "78-50".

(83) Schedule 1, item 70, page 26 (lines 3 to 5), omit the item, substitute:

70 Section 195-1 (note at the end of the definition of taxable supply )

Omit "72-5, 78-45, 78-50", substitute "66-45, 72-5, 78-25, 78-60".

(84) Schedule 1, page 26 (after line 5), after item 70, insert:

70A Section 195-1 (note at the end of the definition of taxable supply )

Omit "and 90-5", substitute ", 90-5 and 100-5".

(85) Schedule 1, item 74, page 26 (line 19), omit "78-3, 78-40, 78-45, 78-125", substitute "78-5, 78-60, 78-95".

(86) Schedule 1, item 77, page 26 (lines 24 to 27), omit the item, substitute:

77 Section 195-1

Insert:

voucher has the meaning given by section 100-25.

(87) Schedule 1, page 27 (after line 3), before item 78, insert:

77A Paragraph 7-10(3)(c)

After "item", insert "4, 8, 15,".

(88) Schedule 1, page 27, after proposed new item 77A, insert:

77B Paragraph 15-40(1)(c)

Omit "due", substitute "*overdue".

77C Subparagraph 15-40(2)(b)(ii)

Omit "due", substitute "*overdue".

(89) Schedule 1, page 27, after proposed new item 77C, insert:

77D Paragraph 15-45(1)(b)

Omit "due", substitute "*overdue".

77E Subparagraph 15-45(2)(a)(ii)

Omit "due", substitute "*overdue".

(90) Schedule 1, page 27 (after line 11), at the end of the Part, add:

78A Section 27-1

Insert:

overdue : a debt is overdue if there has been a failure to discharge the debt, and that failure is a breach of the debtor's obligations in relation to the debt.

(91) Schedule 1, page 28 (after line 3), before item 79, insert:

78B Subsection 7-15(1)

After "item", insert "4, 8,".

(92) Schedule 1, page 28, after proposed new item 78C, insert:

78D At the end of Part 5

Add:

Division 25—Tourist refund scheme

25-1 What this Division is about

If you take wine overseas as accompanied baggage, you may be entitled to a refund of the wine tax borne by you on the wine.

25-5 Tourist refund scheme

(1) If:

(a) you have *borne wine tax on wine that you purchased; and

(b) the purchase is of a kind specified in the regulations; and

(c) you leave Australia, and export the wine from Australia as accompanied baggage, in the circumstances specified in the regulations;

the Commissioner must, on behalf of the Commonwealth, pay to you an amount equal to:

(d) the amount of the wine tax that you have borne on the wine; or

(e) such proportion of that amount of wine tax as is specified in the regulations.

(2) The regulations may specify how amounts of *wine tax borne are to be worked out.

(3) The amount is payable within the period and in the manner specified in the regulations.

(93) Schedule 2, page 29 (after line 5), before item 1, insert:

1AA Paragraph 11(1A)(a)

Repeal the paragraph.

(94) Schedule 2, item 1, page 29 (lines 6 to 9), omit the item, substitute:

1 Before subsection 11(2)

Insert:

(1B) This section does not apply to:

(a) a supply of a long-term lease made before 1 July 2000; or

(b) a supply of a voucher made before 1 July 2000 if, on redemption of the voucher, the holder of the voucher is entitled to supplies up to a monetary value stated on the voucher.

(95) Schedule 2, page 29 (after line 9), after item 1, insert:

1A Subsection 11(4)

Repeal the subsection, substitute:

(4) If this section has an effect in relation to a supply, it has a corresponding effect in relation to the acquisition to which the supply relates.

(96) Schedule 2, page 29, after proposed new item 1A, insert:

1B After subsection 12(1)

Insert:

(1A) However, this section does not apply to a supply of a warranty (whether express, implied or required by law) that relates to goods or a service, if the value of the warranty was included in the price of the goods or service.

(97) Schedule 2, item 2, page 29 (after line 13), after subsection (4), insert:

(5) In this section:

warranty , in relation to goods or a service, means an undertaking or obligation in relation to:

(a) the quality, performance or characteristics of the goods or service; or

(b) the provision of services that are or may at any time be required in respect of the goods or service; or

(c) the supply of parts that are or may at any time be required for the goods;

given or made in connection with the supply of the goods or service.

(6) If this section has an effect in relation to a supply, it has a corresponding effect in relation to the acquisition to which the supply relates.

(98) Schedule 2, page 29 (after line 19), after item 3, insert:

3A At the end of section 14

Add:

(6) If this section has an effect in relation to a supply, it has a corresponding effect in relation to the acquisition to which the supply relates.

(99) Schedule 2, page 30 (after line 3), after item 7, insert:

7A After subsection 16(3)

Insert:

(3A) However, if the amount of sales tax you have borne in respect of the goods changes after 1 July 2000, the amount of the special credit changes accordingly.

7B Subsection 16(4)

Omit "before 22 January 2001", substitute "for a tax period that ends before 7 January 2001".

7C Subsection 16(4A)

Repeal the subsection, substitute:

(4A) If the amount of the special credit changes under subsection (3A) after you lodged that return, you must lodge with the Commissioner an amended GST return for that tax period. You must lodge it on or before the 21st day of the month following the end of the tax period in which the change happens.

(100) Schedule 2, page 33 (after line 5), after item 9, insert:

9A At the end of section 20

Add:

(5) If you are not entitled to an input tax credit on an acquisition because of this section, sections 21-15 and 21-20 of the GST Act do not apply to you in relation to that acquisition.

(6) If an input tax credit to which you are entitled is reduced by 50% because of this section, then, for the purposes of applying section 21-15 or 21-20 of the GST Act (where relevant), the amount of any adjustment under that section is reduced by 50% (before any application of Division 136 of that Act).

(101) Schedule 2, item 10, page 33 (lines 6 to 13), omit the item, substitute:

10 Subsections 22(1) and (2)

Omit "is not a taxable supply", substitute "does not give rise to any adjustment, and is not a taxable supply, under Division 78 of the GST Act".

11 Subsections 22(3) and (4)

Repeal the subsections.

(102) Schedule 2, page 33, at the end of the Schedule, add (after proposed new item 11):

12 Section 23

Repeal the section, substitute:

23 Input tax credits relating to compulsory third party schemes

(1) You are not entitled to an input tax credit for:

(a) a premium, contribution or similar payment made under, or a levy paid in connection with, a compulsory third party scheme before 1 July 2003; or

(b) a premium paid, before 1 July 2003, on an insurance policy issued under a compulsory third party scheme.

(2) A compulsory third party scheme is:

(a) a statutory compensation scheme; or

(b) a scheme or arrangement, established by an Australian law, under which insurance policies are issued;

that is specified in the regulations, or that is of a kind specified in the regulations.

(103) Schedule 2, page 33, at the end of the Schedule, add (after proposed new item 12):

13 After section 23

Insert:

23A Disclosure before 1 July 2000 of entitlement to input tax credits for insurance premiums

Section 78-50 of the GST Act does not apply to an entity in relation to an insurance policy supplied before 1 July 2000 if, before that day, the entity informed the insurer of the extent to which the entity was entitled to an input tax credit for the premium it paid.

(104) Schedule 2, page 33, at the end of the Schedule, add (after proposed new item 13):

14 At the end of Part 5

Add:

24A Unredeemed vouchers

Section 100-15 of the GST Act applies to vouchers supplied before 1 July 2000, and not redeemed before that day, in the same way that it applies to vouchers supplied after that day.

(105) Schedule 4, page 36 (after line 4), before item 1, insert:

1A Section 5 (heading)

Repeal the heading, substitute:

5 Application to government entities and non-profit sub-entities

1B Section 5

After "*government entity", insert ", or a *non-profit sub-entity,".

(106) Schedule 4, page 36 (after line 20), after item 4, insert:

4A At the end of section 38

Add:

(3) For the avoidance of doubt, the fact that activities of a body are limited to making supplies to members of the body does not prevent those activities being in the form of an adventure or concern in the nature of trade within the meaning of paragraph (1)(b).

(107) Schedule 4, page 36, after proposed new item 4A, insert:

4B Section 41

Insert:

non-profit sub-entity : a branch of an entity is a non-profit sub-entity if:

(a) the entity has chosen to apply Division 63 of the A New Tax System (Goods and Services Tax ) Act 1999 , and that choice still has effect; and

(b) the branch maintains an independent system of accounting; and

(c) the branch can be separately identified by reference to:

(i) the nature of the activities carried on through the branch; or

(ii) the location of the branch; and

(d) the branch is referred to in the entity's records to the effect that it is to be treated as a separate entity for the purposes of the GST law.

(108) Page 36 (after line 24), after Schedule 4, insert:

Schedule 4A—Income tax deductions for GST-related expenditure

Income Tax Assessment Act 1997

1 Section 12-5 (after table item headed "grape vines")

Insert:

GST—acquiring or upgrading plant to meet GST obligations etc.

depreciation for cost of plant 42-168

software 42-168, 46-25

upgrading plant 25-80

2 Section 12-5 (table item headed "software")

After:

abandoned software 46-70

insert:

GST—acquiring or upgrading plant to meet GST obligations etc. 42-168, 46-25

3 Section 20-30 (after table item 1.7)

Insert:

1.7AA

25-80

upgrading plant to meet GST obligations etc.

4 After section 25-75

Insert:

25-80 Upgrading plant to meet GST obligations etc.

(1) You can deduct expenditure you incur in upgrading *plant if:

(a) you incur the expenditure between 1 July 1999 and 30 June 2000; and

(b) you do so for the purpose of, or for purposes that include the purpose of, meeting your existing or future obligations, or exercising your existing or future rights, under the *GST law; and

(c) you are the owner or *quasi-owner of the plant when you incur the expenditure; and

(d) you use the upgraded plant before 1 July 2000, or have it *installed ready for use immediately before 1 July 2000; and

(e) your *pre-GST annual turnover for the income year in which you incur the expenditure does not exceed $10,000,000; and

(f) immediately before 1 July 2000, you are registered under Part 2-5 of the *GST Act.

Substituted accounting periods

(2) If the income year in which you incur the expenditure ends before 30 June 2000, you are taken to have complied with paragraph (1)(f) if:

(a) when you lodge your *income tax return for the income year, you are registered under Part 2-5 of the *GST Act; or

(b) before you lodge your income tax return for the income year, you applied for registration under Part 2-5 of the GST Act and, when you lodge the return, the application has not been refused.

(3) However, if subsection (2) has applied to you but, immediately before 1 July 2000, you are not registered under Part 2-5 of the *GST Act, you cannot deduct the expenditure. If you have already deducted it, your assessment may be amended to disallow the deduction.

5 Before section 42-170

Insert:

42-168 Acquiring plant to meet GST obligations etc.

(1) Despite sections 42-160 and 42-165, your deduction is the *plant's *cost for the income year in which you become its owner or *quasi-owner if:

(a) you become the owner or quasi-owner of the plant between 1 July 1999 and 30 June 2000; and

(b) you do so for the purpose of, or for purposes that include the purpose of, meeting your existing or future obligations, or exercising your existing or future rights, under the *GST law; and

(c) your *pre-GST annual turnover for the income year does not exceed $10,000,000; and

(d) immediately before 1 July 2000, you are registered under Part 2-5 of the *GST Act.

Substituted accounting periods

(2) If the income year in which you become the owner or *quasi-owner of the *plant ends before 30 June 2000, you are taken to have complied with paragraph (1)(d) if:

(a) when you lodge your *income tax return for the income year, you are registered under Part 2-5 of the *GST Act; or

(b) before you lodge your income tax return for the income year, you applied for registration under Part 2-5 of the GST Act and, when you lodge the return, the application has not been refused.

(3) However, if subsection (2) has applied to you but, immediately before 1 July 2000, you are not registered under Part 2-5 of the *GST Act, you cannot deduct the *plant's *cost. If you have already deducted it, your assessment may be amended to disallow the deduction.

6 At the end of Subdivision 46-B

Add:

46-62 Software expenditure to meet GST obligations etc.

The modifications set out in sections 46-35, 46-40, 46-45 and 46-50 are to be disregarded in the application of section 42-168 (meeting GST obligations etc.) to units of *software.

7 At the end of paragraph 46-85(d)

Add ", or deductible by virtue of section 42-168 (meeting GST obligations etc.) as applied by section 46-62".

8 At the end of Division 960

Add:

Subdivision 960-R—Pre-GST annual turnover

960-370 Meaning of pre-GST annual turnover

General rule

(1) Your pre-GST annual turnover for an income year is your *group turnover for the income year.

Note: Your pre-GST annual turnover will not be relevant to an income year starting after 30 June 2000, because it is only relevant to deductions for costs related to preparing for the GST (see sections 25-80, 42-168 and 46-62).

New businesses

(2) However, if you, or one or more of the entities *connected with you, did not start to carry on *business until after the start of the income year:

(a) you must make a reasonable estimate of the amount that would have been your *group turnover for the income year if you, and all of the entities connected with you, had carried on business throughout the income year; and

(b) that estimate is your pre-GST annual turnover for the income year.

9 Subsection 995-1(1)

Insert:

group turnover : the group turnover of an entity (the primary entity ) for an income year is the sum of:

(a) the *value of the business supplies the primary entity made in the income year; and

(b) the value of the business supplies entities *connected with the primary entity made in the income year;

reduced by:

(c) that part of the value of the business supplies the primary entity made in the income year that is attributable to *supplies it made during the year to entities connected with it when they were connected with it; and

(d) that part of the value of the business supplies entities connected with the primary entity made in the income year that is attributable to supplies the connected entities made during the year to the primary entity when they were connected with it; and

(e) that part of the value of the business supplies another entity made in the income year that is attributable to supplies the other entity made to a third entity at a time when both the other entity and third entity were connected with the primary entity.

10 Subsection 995-1(1)

Insert:

GST law has the meaning given by section 195-1 of the *GST Act.

11 Subsection 995-1(1)

Insert:

pre-GST annual turnover has the meaning given by Subdivision 960-R.

12 Subsection 995-1(1)

Insert:

value of the business supplies : the value of the business supplies an entity makes in an income year is the sum of:

(a) for *taxable supplies (if any) the entity made during the year in the ordinary course of carrying on a *business—the value (as defined by section 9-75 of the *GST Act) of the supplies; and

(b) for other supplies the entity made during the year in the ordinary course of carrying on a business—the prices (as defined by section 9-75 of the GST Act) of the supplies.

(109) Page 36, (after line 24), before Schedule 5, insert:

Schedule 4B—Diesel Fuel Rebate Scheme

Customs Act 1901

1 Paragraph 164(1)(ac)

Omit "use", substitute "transport".

2 After subsection 164(4B)

Insert:

(4C) The rebate payable under subsection (1) to a person in respect of diesel fuel purchased by the person for use in a manner referred to in paragraph (1)(ab) or (ac) (rail or marine transport) is payable at the rate that the rebate would be payable if the use of the diesel fuel had been in primary production (other than forestry).

3 Paragraphs 164(5AC)(a) and (b)

Omit "under subsection (5) or (5A)".

4 Subsection 164(7) (definition of marine use )

Repeal the definition.

5 Subsection 164(7) (definition of marine transport )

Insert:

marine transport includes transport by vessels in or on fresh water, but does not include any transport relating to forestry.

Customs and Excise Amendment (Diesel Fuel Rebate Scheme) Act 1999

6 Item 5 of Schedule 1

Repeal the item.

7 Item 5 of Schedule 2

Repeal the item.

Excise Act 1901

8 Paragraph 78A(1)(ac)

Omit "use", substitute "transport".

9 After subsection 78A(4B)

Insert:

(4C) The rebate payable under subsection (1) to a person in respect of diesel fuel purchased by the person for use in a manner referred to in paragraph (1)(ab) or (ac) (rail or marine transport) is payable at the rate that the rebate would be payable if the use of the diesel fuel had been in primary production (other than forestry).

10 Paragraphs 78A(5AC)(a) and (b)

Omit "under subsection (5) or (5A)".

11 Subsection 78A(7)

Omit " marine use ", substitute " marine transport ".

(110) Schedule 5, page 47 (after line 8), at the end of the Schedule, add:

Taxation Administration Act 1953

38 After Division 7A of Part VI

Insert:

Division 7B—Indirect tax refund schemes

62B Refund scheme—defence related international obligations

(1) If:

(a) an acquisition covered by a determination of the Defence Minister is made:

(i) by or on behalf of a visiting force that is; or

(ii) by a member of the visiting force who is; or

(iii) any other person who is;

covered by a determination of the Defence Minister; and

(b) at the time of the acquisition, it was intended for:

(i) the official use of the visiting force; or

(ii) the use of a member of the visiting force; or

(iii) any other use;

and that use is covered by a determination of the Defence Minister;

the Commissioner must, on behalf of the Commonwealth and subject to subsection (4), pay to a person in a class of persons determined by the Defence Minister an amount equal to the amount of indirect tax (if any) borne by the entity in respect of that acquisition.

(2) A determination of a person under subparagraph (1)(a)(iii) and of a use under subparagraph (1)(b)(iii) may be made if, and only if, the Commonwealth is under an international obligation to grant indirect tax concessions in relation to the kind of person and the kind of use.

(3) A claim for an amount covered by subsection (1) must be in the approved form.

(4) The amount is payable:

(a) in accordance with the conditions and limitations; and

(b) within the period and manner;

determined by the Defence Minister.

(5) A determination under this section is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901 .

(6) In this section:

Defence Minister means the Minister administering the Defence Act 1903 .

member of a visiting force and visiting force have the meaning given by section 5 of the Defence (Visiting Forces) Act 1963 .

62C Refund scheme—international obligations

(1) If an entity of a kind specified in the regulations makes an acquisition of a kind specified in the regulations, the Commissioner must, on behalf of the Commonwealth and subject to subsection (4), pay to the entity (or a person in a class of persons determined by the Commissioner) an amount equal to the amount of indirect tax (if any) borne by the entity in respect of that acquisition.

(2) The regulations may specify a kind of entity and a kind of acquisition if, and only if, the Commonwealth is under an international obligation to grant indirect tax concessions in relation to the kind of entity and the kind of acquisition.

(3) A claim for an amount covered by subsection (1) must be in the approved form.

(4) The amount is payable:

(a) in accordance with the conditions and limitations; and

(b) within the period and manner;

set out in the regulations.

(111) Schedule 6, page 48 (after line 5), before item 1, insert:

1A At the end of Division 17

Add:

17-25 GST attributable because of the GST Transition Act

If:

(a) section 10 of the A New Tax System (Goods and Services Tax Transition) Act 1999 applies in an income year that ends after 30 November 1999 and before 1 July 2000 in relation to a *taxable supply that you will make on or after 1 July 2000; and

(b) because of the application of that section, an amount of *GST is attributable to your first *tax period after 1 July 2000;

an amount equal to the amount of GST is not assessable income.

(112) Schedule 6, page 48, after proposed new item 1A, insert:

1B At the end of Division 17 (after section 17-25)

Add:

17-30 Special credits because of the GST Transition Act

A special credit under section 16, 16A, 16B, 16C or 19A of the A New Tax System (Goods and Services Tax Transition) Act 1999 is assessable income :

(a) at the time it is attributed to a tax period (for a credit under section 16, 16A, 16B or 19A); or

(b) at the time it is paid (for a credit under section 16C).

(113) Schedule 6, page 48, after proposed new item 1B, insert:

1C At the end of Division 27

Add:

27-30 Input tax credits attributable because of the GST Transition Act

If:

(a) section 10 of the A New Tax System (Goods and Services Tax Transition) Act 1999 applies in an income year that ends after 30 November 1999 and before 1 July 2000 in relation to a *creditable acquisition that you will make on or after 1 July 2000; and

(b) because of the application of that section, an *input tax credit is attributable to your first *tax period after 1 July 2000;

you cannot deduct under this Act an amount equal to the input tax credit.

(114) Schedule 6, items 1 and 2, page 48 (lines 6 to 16), omit the items, substitute:

1 Subsection 995-1(1) (definition of assessable income )

Omit "and 17-10", substitute ", 17-10 and 17-30".

2 Subsection 995-1(1)

Insert:

creditable acquisition has the meaning given by section 195-1 of the *GST Act.

2A Subsection 995-1(1)

Insert:

tax period has the meaning given by section 195-1 of the *GST Act.

(115) Schedule 6, page 50 (after line 26), at the end of the Schedule, add:

Taxation Administration Act 1953

15 After subparagraph 37(1)(b)(iii)

Insert:

; or (iv) creditable acquisitions or creditable importations;

(116) Schedule 6, page 50, at the end of the Schedule, add (after proposed new item 15):

16 After section 52

Insert:

52A Liability related to non-profit sub-entities

(1) Obligations that would be imposed under the GST law on a non-profit sub-entity are imposed on each person who is responsible, to persons or bodies outside the sub-entity, for the management of the sub-entity, but may be discharged by any person who is so responsible.

(2) Any offence against the GST law that is committed by the sub-entity is taken to have been committed by each person who is responsible, to persons or bodies outside the sub-entity, for the management of the sub-entity.

(3) In a prosecution of a person for an offence that the person is taken to have committed because of subsection (2), it is a defence if the person proves that the person:

(a) did not aid, abet, counsel or procure the relevant act or omission; and

(b) was not in any way knowingly concerned in, or party to, the relevant act or omission (whether directly or indirectly and whether by any act or omission of the entity).

(117) Schedule 6, page 50, at the end of the Schedule, add (after proposed new item 16):

17 Subsection 62(2) (after table item 37)

Insert:

37A

cancelling the registration of a non-profit sub-entity

subsection 63-35(1)

(118) Schedule 6, page 50, at the end of the Schedule, add (after proposed new item 17):

18 After subsection 70(1)

Insert:

(1A) If you choose to apply Division 63 (non-profit sub-entities) of the GST Act, you must:

(a) keep records that record:

(i) your choice to apply that Division; and

(ii) each branch that is treated as a separate entity for the purposes of the GST law; and

(iii) each branch that has ceased to be treated as a separate entity for the purposes of the GST law; and

(b) retain those records for at least 5 years after you revoke the choice.

(119) Schedule 6, page 50, at the end of the Schedule, add (after proposed new item 18):

Wool Tax (Administration) Act 1964

19 At the end of section 10

Add:

(5) Despite section 177-12 of the A New Tax System (Goods and Services Tax) Act 1999 , a reference in subsection (1) to the price of the supply of wool is taken not to include the net GST that is, or would be, payable by an entity making the supply.

(6) Expressions used in subsection (5) have the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999 .

Many of these amendments have come about as a result of continuing consultation with industry, state governments and the not-for-profit sector. The government has listened to their concerns and responded to them through these amendments. The majority of these amendments will be welcomed by business and the community in general. Most amendments involve slight changes to the law to provide more certainty. There is one revenue protection measure.

In my comments I intend to address only the main issues covered by the amendments. The first issue is the immediate deductibility of expenditure for small and medium sized businesses on GST related plant and software. This amendment will implement a major initiative of the government to assist small and medium sized businesses as they prepare for the introduction of the GST. As the government announced on 19 August, there will be an immediate income tax deduction for small and medium sized businesses for expenditure incurred in acquiring or upgrading plant or software to prepare for the GST. This immediate deduction will have an estimated revenue cost of $175 million in the 2000-01 financial year. It is in addition to the $500 million that the government is providing to help small and medium sized businesses, charities and education bodies prepare for the start of the GST. The deduction will be available to a business with an annual turnover not exceeding $10 million. The turnover test will include the turnover of any entities connected to the business. The deduction will apply to expenditure on acquiring or upgrading plant to meet obligations or exercise rights under the GST law. It is to be available for expenditure incurred during the current financial year.

Change to the treatment of insurance

The amendment simplifies the treatment of general insurance without altering the fundamental basis of the policy. This will mean that businesses will not be liable for GST on any payouts they receive. This amendment was made in response to issues raised by the insurance industry.

Supply of farmland

The government is also seeking to amend the GST act to ensure that the sale of farmland is GST free, even if the entity supplying the land is different from the entity carrying on the farming business on the land. That is, the supply is GST free provided that the farming business has been carried on on the land for five years. A further amendment clarifies that the supply of the farmland is only GST free if it is the sale of farmland or a supply by way of long-term lease.

Sale of unimproved crown land

The government is also clarifying that when a government holds unimproved land at 1 July 2000 that is subsequently improved before supply, it is the unimproved land that is to be valued at the date of sale for the purpose of applying the margin scheme when calculating the amount of GST payable.

Structural flexibility for certain non-profit bodies

The amendments provide flexibility for charitable institutions, trustees of charitable funds, gift deductible entities and certain non-profit bodies that are income tax exempt to treat separately identifiable units of their organisations as though they are separate entities for GST purposes.

Ensure that non-incorporated bodies are carrying on the enterprise and not the members

This amendment will make it clear that a non-incorporated body is carrying on an enterprise and not the individual members.

Determining the extent of creditable purpose for entities making financial supplies

The amendment allows the commissioner to determine appropriate apportionment methodology for working out the amount of input tax credits claimable by the financial supply provider. This will assist entities in making financial supplies to determine the amount of input tax credits that they are entitled to.

Goods taken from stock for private or domestic use

This amendment ensures that GST is payable where an individual carrying on an enterprise takes taxable goods from their stock for private or domestic use. This amendment will ensure that in these circumstances an appropriate adjustment is made to the input tax credit previously claimed.

Adjustments for stock on hand for a new registrant

This amendment will allow an unregistered entity when it becomes registered to claim input tax credits for the GST included in the cost price of stock held at that date for sale or manufacture.

Treatment of vouchers

This amendment will ensure that certain vouchers—for example, gift vouchers—are subject to GST at the time of redemption. It will apply to vouchers that have a specified monetary value. Bus tickets, postage stamps and vouchers for specified goods or services will continue to be taxed at the time the ticket or voucher is supplied. This amendment was requested by the Australian Retailers Association and will be welcomed by the industry. I have just about 30 seconds more, Madam Deputy Speaker, so you might give me the call again. (Extension of time granted)

Amendments to the diesel fuel rebate scheme

The first amendment restores the original policy intent to extend the diesel fuel rebate scheme to marine `transport' use. Under the second amendment, the diesel fuel rebate scheme for the new marine and rail transport categories will be the same rate as that applying to the primary production category. The rebate rate for primary production is considered to be a full rebate. This amendment will fulfil the intention of the government to pay a full rebate for marine and rail transport categories.

There are also a number of other technical amendments to the GST and related ANTS legislation and the majority of the technical amendments are to correct errors in drafting and these include typographical errors and incorrect cross-references. I commend the amendments to the chamber.