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Sales Tax Legislation Amendment Bill (No. 1) 1998

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1998

 

 

 

The Parliament of the Commonwealth of Australia

 

 

 

house of representatives

 

 

 

sales tax legislation amendment bill ( No. 1) 1998

 

 

 

 

 

Explanatory Memorandum

 

 

 

 

 

(Circulated by authority of the

Treasurer, the Hon Peter Costello, MP)



T able of contents

General outline and financial impact ............................................................................................ 1

Chapter

1.         Exemption for space objects..........................................................................................................................       3

2.         Exemption for goods imported by Olympians....................................................................................... 11

3.         Part 7A goods                        ..................................................................................................................... 15

4.         Temporary importation of goods............................................................................................................. 19

 



G eneral outline and financial impact

Exemption for space objects

This measure will exempt from sales tax space launch vehicles, payloads and other goods which are, or are intended to be, launched into or brought back from outer space.

Date of effect:  The exemption will apply from the date of Royal Assent.

There will also be a new transitional credit ground to ensure that dealings in relevant space equipment which occur on or after 23 June 1998 and before commencement of the exemption outlined above do not bear sales tax.

Proposal announced:  This measure was announced by the Government on 23 June 1998.

Financial Impact:  The revenue loss resulting from the exemption of space launch and related equipment is unquantifiable at present. However the sales tax that would otherwise be payable on importing a launch vehicle would be about $60 million.

Compliance cost impact:  The compliance costs will be negligible.

Summary of Regulation Impact Statement

Impact:   Low

Main Points:

This measure will insert a new exemption item into Chapter 15 (Miscellaneous) of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 . Under this exemption item, the following types of space equipment will be exempt from sales tax:

·         space launch vehicles which can, or are intended to be able to, carry a payload into or back from outer space;

·         payloads, or other goods, that a launch vehicle is to carry into or back from outer space;

·         goods marketed as or for use as parts for any of the goods above; and

·         goods for use exclusively as raw materials in constructing or repairing space launch vehicles, payloads or other goods to be carried into or back from outer space.

This measure will also introduce a new transitional credit ground into Table 3A of Schedule 1 to the Sales Tax Assessment Act 1992 . This is to allow relief from sales tax paid on dealings in space equipment which occur on or after 23 June 1998 and before this measure becomes law.

The provision of such relief gives effect to the Government’s announcement on 23 June 1998, that from that date satellites, space launch vehicles and associated equipment will not bear sales tax.

Policy Objective:

The policy objective of this measure is to introduce a sales tax exemption for space launch vehicles, payloads and other goods which are, or are intended to be, launched into outer space.

The exemption of these goods from sales tax is intended to:

·         facilitate the establishment of a viable commercial space industry in Australia; and

·         establish access to the expanding world demand for satellite launch facilities.

Exemption for goods imported by Olympians

The measure will exempt from sales tax certain goods imported by non-Australian members of the Sydney 2000 Olympic and Paralympic Family Members and delegations and participants in the Sydney 2000 Olympics, Paralympic and associated events to give effect to the decision of the Ministerial Committee of the Sydney 2000 Games included in the Committee’s Minute of 27 August 1997.

Date of effect :  From the date of Royal Assent.

Proposal announced :  Not yet announced.

Financial impact :  Unquantifiable but expected to be low.

Compliance cost impact :  The compliance costs will be negligible.

Part 7A goods

The measures correct and strengthen the new sales tax laws implementing a comprehensive scheme for dealing with sales tax evasion in the computer industry.

Date of effect :  The corrections to the table in Part 7A of the Sales Tax Assessment Act will apply from the date of introduction of the Bill.

The new penalties will apply from the date of Royal Assent.

The new rules for exported goods will apply from a date to be prescribed.

Proposal announced :  Not yet announced.

Financial impact :  Unquantifiable revenue gain.

Compliance cost impact :  Compliance costs will increase to ensure that only genuine exporters receive the exemptions.

Temporary importation of goods

Amends the Sales Tax Assessment Act 1992 to impose sales tax on re-imported goods that have previously been exempted from sales tax as goods which were imported on a temporary basis and were used in Australia.

Date of effect:  After 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997.

Proposal announced:  Treasurer's press release No. 52 of 13 May 1997.

Financial impact:  Estimated gain in revenue of $2 million per annum from 1997-98 to 2000-2001.

Compliance cost impact:  Minimal as the number of taxpayers involved is very small.



C hapter 1

Exemption for space objects

Overview

1.1         The amendments in Schedule 1 will provide a sales tax exemption for certain items of space equipment. Schedule 1 also contains amendments to exempt from sales tax goods imported into Australia by certain non-Australians connected with the Sydney 2000 Sydney 2000 Olympic Games and associated events. Chapter 2 contains an outline of those amendments.

Summary of the Amendments

Purpose of the amendments

1.2         These amendments will insert a new exemption item into Chapter 15 (Miscellaneous) of Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 (the Exemptions and Classifications Act).   [Item 2]   Under this exemption item, the following types of space equipment will be exempt from sales tax:

·         space launch vehicles which can, or are intended to be able to, carry a payload into or back from outer space;

·         payloads, or other goods, that a launch vehicle is to carry into or back from outer space;

·         goods marketed as or for use as parts for any of the goods above; and

·         goods for use exclusively as raw materials in constructing or repairing space launch vehicles, payloads or other goods to be carried into or back from outer space.

Date of effect

1.3         The exemption will apply to dealings after the date of Royal Assent. [Item 3]

1.4         The amendments will also introduce a new transitional ground into Table 3A of Schedule 1 to the Sales Tax Assessment Act 1992 (the Assessment Act). [Item 1] This transitional credit ground will ensure that taxpayers who are liable to pay sales tax on dealings in relevant goods on or after 23 June 1998 and before these amendments receive Royal Assent will be able to claim a sales tax credit for the amount of tax.

Background to the legislation

1.5         By media release dated 23 June 1998, the Government announced that from that date, satellites, space launch vehicles and other goods intended for launch would be exempt from sales tax.

1.6         The exemption of such equipment from sales tax is intended to:

·         facilitate the establishment of a viable commercial space industry in Australia; and

·         establish access to the expanding world demand for satellite launch facilities.

Explanation of the amendments

1.7         The amendments to the Exemptions and Classifications Act will provide exemption from sales tax for the following goods:

·         space launch vehicles which can, or are intended to be able to, carry a payload into or back from outer space;

·         payloads or other goods intended to be carried into or back from outer space;

·         goods marketed as or for use as parts for any of the goods above; and

·         goods for use exclusively as raw materials in constructing or repairing space launch vehicles, payloads or other goods to be carried into or back from outer space.

1.8         The exemption will be enacted by adding a new item, item 196, to Schedule 1 to the Exemptions and Classifications Act. [Item 2]

1.9         To qualify for exemption under new item 196 , it is essential that the goods be either:

·         intended for launch from the earth’s surface and to proceed towards outer space; or

·         be brought back from outer space.

1.10       The term ‘payload’ includes satellites and extends to payloads which are not being launched on a commercial basis. Examples of such payloads include loads launched for testing purposes or on a non-profit basis. [Item 2, subitem 196(3)]

1.11       Goods will be considered exempt even if they are only to go some of the way towards or back from outer space. An example of such a good is a fuel tank which is discarded during the launch vehicle’s ascent into outer space.

1.12       Goods which are connected with the items listed above but which are not themselves intended to be launched will not be covered by the exemption.  This is because the exemption only applies to goods which are themselves intended to leave the ground and proceed towards or into outer space or which have been brought back from outer space.

1.13       Examples of goods which will not be covered by this exemption include:

·         goods for use in the construction, maintenance or repair of a space launch vehicle or payload which do not themselves form an integral part of the launch vehicle, payload or other goods intended for launch;

·         goods for use in the land-based transport of payloads or space launch vehicles;

·         launch platforms;

·         goods for use in connection with the storage or housing of payloads or space launch vehicles.

1.14       The exemption will apply to both re-useable and expendable space launch vehicles.

1.15       To qualify for an exemption under this item, it is not necessary that the payload be successfully launched into space or that the launch vehicle successfully reach outer space.

Transitional Credit

1.16       The amendments to the Assessment Act will introduce a new transitional credit ground, TCR4, into Table 3A of Schedule 1 to that Act. This is to allow relief from sales tax paid on dealings in space equipment which occur on or after 23 June 1998 and before these amendments receive Royal Assent. [Item 1]

1.17       The provision of such relief gives effect to the Government’s announcement that from 23 June 1998 satellites, space launch vehicles and associated equipment will not bear sales tax.

1.18       The credit will apply to dealings that:

·         occur on or after 23 June 1998; and

·         would have been exempt if the exemption item for space equipment had been in operation at the time of the dealing.

1.19       The amount of the credit will be the tax borne on the dealing to the extent that the claimant has not passed it on.

1.20       A taxpayer’s entitlement to a credit will arise on the commencement of these amendments, ie. on receiving Royal Assent.

Application

1.21       The amendments to the Exemptions and Classifications Act will apply to dealings on or after the day on which these amendments receive Royal Assent. [Item 3]

1.22       The amendments to the Assessment Act will apply to dealings which occur on or after 23 June 1998 and before these amendments receive Royal Assent. [Item 1]

Regulation Impact Statement

Policy objective

1.23       The policy objective of this measure is to introduce a sales tax exemption for space launch vehicles, payloads and other goods which are, or are intended to be, launched into outer space. 

1.24       The exemption of these goods from sales tax is intended to:

·         facilitate the establishment of a viable commercial space industry in Australia; and

·         establish access to the expanding world demand for satellite launch facilities.

Implementation

1.25       To give effect to this policy objective it will be necessary to include an additional sales tax exemption item in Schedule 1 to the Sales Tax (Exemptions and Classifications) Act 1992 .

1.26       This item will operate to exempt the following goods from sales tax:

·         space launch vehicles which can, or are intended to be able to, carry a payload into or back from outer space;

·         payloads and other goods intended to be carried into or brought back from outer space;

·         goods marketed as or for use as parts for any of the goods above; and

·         goods for use exclusively as raw materials in constructing or repairing space launch vehicles, payloads or other goods to be carried into or back from outer space.

1.27       The item will only cover goods which are, or are intended to be, launched into, or which have been brought back from, outer space.

1.28       By joint media release dated 23 June 1998, the Treasurer and the Minister for Industry, Science and Tourism announced that the exemption would apply from 23 June 1998.

1.29       Under the sales tax legislation, it is ineffectual to make a sales tax exemption retrospective. The reason is that until an exemption item becomes law, taxpayers must pay tax on any taxable transactions.

1.30       In order to give effect to the joint media release of the Treasurer and the Minister for Industry, Science and Tourism, it will be necessary to rely on a legislative mechanism which allows relief from sales tax for dealings in space equipment which occur on or after 23 June 1998 but before the date of Royal Assent.

1.31       The inclusion of a new transitional credit ground in Table 3A of Schedule 1 to the Sales Tax Assessment Act 1992 will provide such relief.

1.32       This credit will apply to dealings that:

·         occur on or after 23 June 1998, the date of the joint media release, and before the date of Royal Assent; and

·         would have been exempt if the exemption item for space equipment had been in force at the time of the dealing.

1.33       The amount of the credit will be the amount of sales tax borne to the extent that the claimant has not passed it on.

1.34       The time the credit arises will be on the commencement of the amending legislation, ie. the date of Royal Assent.

Assessment of impacts

Impact group identification

1.35       The groups most likely to be affected by this option are:

·         space industry participants; and

·         the Government.

1.36       Within government the groups most likely to be affected are:

·         the Federal Government, through a loss to the general revenue;

·         the Australian Taxation Office (ATO), which will have to administer the exemption and the transitional credit ground; and

·         the Australian Customs Service (ACS), which collects sales tax on relevant goods at the point of importation.

Assessment of costs

Space Industry

1.37       Entities conducting space launch operations within Australia are likely to deal with a mixture of exempt and non-exempt equipment.  It is likely that they would need to verify whether particular goods can be considered exempt under the proposed exemption item. This is likely to result in low compliance costs for such entities.

1.38       Limited costs may also be incurred by entities claiming a sales tax credit on the basis of the proposed transitional credit ground.

Government

1.39       The revenue loss resulting from the exemption of space launch and related equipment is unquantifiable at present.  However the sales tax that would otherwise be payable on importing a launch vehicle would be about $60 million.

1.40       Administering the exemption is unlikely to attract further ongoing costs for the ATO, as administrative requirements will be similar to those applying to current exemption items.

1.41       Administration of the transitional credit ground may result in a negligible increase in the ATO’s administrative costs.

Assessment of benefits

Space Industry

1.42       The space launch industry will enjoy the benefit of not having to pay sales tax on space launch vehicles, payloads and associated equipment.

1.43       The transitional credit ground also provides the industry with a straightforward means of ensuring that dealings in these goods which take place during the period from 23 June 1998 to the date the exemption commences do not bear sales tax.

Government

1.44       The exemption and transitional credit should be straightforward to administer because they are consistent with the current legislative framework and administrative practice for sales tax exemptions.

Consultation

1.45       This measure has been developed in consultation with commercial launch operators and Australian satellite manufacturers and operators.

Conclusion

1.46       The proposed amendments will implement the sales tax exemption for space launch and related equipment foreshadowed by the Government in its announcement of 23 June 1998.

1.47       The amendments will ensure that the exemption operates from the date of Royal Assent, the earliest practicable date.  Furthermore, they will provide a straightforward and effective mechanism to ensure that any dealings in space launch and related equipment between 23 June 1998 and Royal Assent do not bear tax.



C hapter 2

Exemption for goods imported by Olympians

Overview

2.1         The amendments in Schedule 1 will provide exemptions from sales tax for certain goods imported by, or on behalf of, non-Australian Sydney 2000 Olympic and Paralympic Family Members and delegations and participants in the Sydney 2000 Olympics, Paralympic and associated events. The amendments give effect to the decision of the Ministerial Committee of the Sydney 2000 Games notified in the Committee’s Minute of 27 August 1997. Schedule 1 also contains amendments to exempt from sales tax certain items of commercial space equipment. Chapter 1 contains an outline of those amendments.

Summary of the amendments

Purpose of the amendments

2.2         The amendments to the Sales Tax (Exemptions and Classifications) Act 1992 (the Exemptions and Classifications Act) will provide an exemption from sales tax for accompanied baggage and personal effects and unaccompanied baggage and cargo imported by, or on behalf of, non-Australian Sydney 2000 Olympic and Paralympic Family Members and delegations, and participants in the Sydney 2000 Olympics, Paralympic and associated events. The exemption is not extended to goods for sale, alcohol and tobacco products, and items of equipment which are more appropriately handled under the temporary importations provision, including in particular high revenue potential items such as vehicles and digital communications equipment.

Date of effect

2.3         The amendments will commence from the date of Royal Assent. The amendments will also provide for a transitional credit ground to ensure the sales tax exemption applies from 1 March 1998, the commencement date of the customs duty exemption provided by item 64 in Schedule 4 to the Customs Tariff Act 1995 .

Background to the legislation

2.4         The Ministerial Committee on the Sydney 2000 Games on 27 August 1997 agreed that certain goods imported by, or on behalf of non-Australian Sydney 2000 Olympic and Paralympic Family Members and delegations, and participants in the Sydney 2000 Olympics, Paralympic and associated events, should be exempted from sales tax. The first events covered by the new exemption will be the Olympic Arts Festival event 'A Sea Change' during 1998 and the International Sailing Regatta in September 1998.

2.5         The exemption is not extended to goods for sale, alcohol and tobacco products, motor vehicles and motor vehicle parts, television cameras and equipment for radio and television broadcasting.

2.6         The measure mirrors and complements a duty exemption agreed to by the Ministerial Committee and provided by item 64 in Schedule 4 to the Customs Tariff Act 1995 .

Explanation of the amendments

2.7         A new transitional credit ground is added to Table 3A of Schedule 1 to the Sales Tax Assessment Act 1992 (the Assessment Act). The new transitional credit ground enables persons to receive credit for sales tax paid for dealings with goods that occurred after the decision by the Ministerial Committee, but before the commencement of the legislative amendments. This rule makes the sales tax exemption available to participants of events such as 'A Sea Change' and the International Sailing Regatta in September 1998. The transitional credit ground covers the period from 1 March 1998, when a corresponding duty exemption came into effect, until the day the new sales tax exemption receives Royal Assent. The exemption will cover most, if not all, of the Sea Change program. [Item 1, new TCR5]

2.8         A new sales tax exemption item is added to Schedule 1 to the Exemptions and Classifications Act. The new exemption item, item 197, provides the exemption to imported goods, if they are covered by item 64 in Schedule 4 to the Customs Tariff Act 1995 . Item 197 does not list the detail of the dealings with goods which are exempt, rather the detail is provided by the reference to proposed new duty exemption, item 64 in Schedule 4 of the Customs Tariff Act 1995 . The amendment of the law in this way ensures that the sales tax and duty exemptions are identical, reflecting the Ministerial Committee’s decision as expressed in the Committee’s Minute of 27 August 1997. [Item 2, new Item 197]

Application

2.9         The amendments to the Assessment Act apply to dealings with goods on or after 1 March 1998 and before these amendments receive Royal Assent. [Item 1]

2.10       The amendments to the Exemptions and Classifications Act apply to dealings on or after these amendments receive Royal Assent. [Item 3]



C hapter 3

Part 7A goods

Overview

3.1         The measures in Schedule 2 to the Bill correct and strengthen the new sales tax laws implementing a comprehensive scheme for dealing with sales tax evasion in the computer industry. The scheme is contained in Part 7A of the Sales Tax Assessment Act 1992 (the Act) which was inserted by Taxation Laws Amendment Act (No. 1) 1998 .

Summary of the amendments

Purpose of the amendments

3.2         The amendments to the Act will change the sales tax rules for computers by:

·         removing anomalies arising from current descriptions and tariff classifications in Part 7A of the Act;

·         increasing the maximum penalty for a person falsely representing himself or herself to be accredited, or a transaction to be authorised under Part 7A of the Act, and the maximum penalty for making improper or false quotes under Part 7A of the Act; and

·         strengthening the law with regard to Part 7A goods for export.

Date of effect

3.3         The corrections to the table in Part 7A of the Act will commence from the date of introduction of the Bill. The new penalties will apply from the date of Royal Assent. The new rules for exported goods will apply from a date to be prescribed.

Background to the legislation

3.4         New sales tax laws implementing a comprehensive scheme for dealing with sales tax evasion in the computer industry are contained in Part 7A of the Act. These were inserted by Taxation Laws Amendment Act (No.1) 1998 which received Royal Assent on 16 April 1998.

3.5         The new law applies to goods which fall within a description and corresponding tariff classification item in the table in Part 7A of the Act. The tariff classifications in the table which relate to CD drives and disc drives (hard and floppy) need to be updated. In addition two new items need to be inserted, for personal computers in the form of systems and processing units for personal computers.

3.6         In the new law there are penalties for a person falsely representing himself or herself to be accredited, or a transaction to be authorised, under Part 7A of the Act and for improper or false quoting. These penalties are not considered to be sufficient given the importance of the accreditation and authorisation system for the success of Part 7A of the Act in tackling evasion, and the level of penalty for similar offences elsewhere in the law.

3.7         Currently, a person can purchase or lease Part 7A goods tax-free for export, without any of the conditions which apply to tax-free purchases or leases of Part 7A goods for other purposes. A wholesaler cannot purchase Part 7A goods tax-free unless the wholesaler is accredited and the quote authorised, while an exporter buying or leasing goods tax-free is not required to be accredited, nor the exemption claim authorised.

Explanation of the amendments

3.8         The amendments in Schedule 2 ensure that the export exemption will not apply to Part 7A goods unless certain tests regarding the purchasers’ intentions for the goods and the circumstances of the sale or delivery are satisfied. If the goods are Part 7A goods, paragraphs 30(1)(b) & (c) and (2)(b) of the Act which deal with exemptions based on export, should not apply unless one of three specific tests are satisfied, or if the seller satisfies the Commissioner on reasonable grounds that he or she was satisfied that the tests were satisfied. [Items 1, 2 and 3]

3.9         The three tests are that the purchaser must be an accredited person who intends that the goods will be exported, the purchaser is not acquiring the goods for resale and satisfies the export low purchase value test, or the circumstances of the sale and delivery are prescribed. The ‘low export purchase value test’ requires that the purchaser have a reasonable expectation that the total value of all acquisitions of Part 7A goods for 12 months before or after the current dealing will be less than $6000. A purchaser must give a signed statement, in a form approved by the Commissioner, that the purchaser satisfies the low export purchase value test in relation to the dealing. There is a penalty for a person falsely representing that a dealing with goods satisfies the test, equal to 50 penalty units. [Item 6, new section 32A; Items 9 and 10]

3.10       The exclusion of Part 7A goods from the export exemption applies equally where the goods are leased. If the goods are Part 7A goods, paragraphs 32(a) and (b) of the Act should not apply unless the lessee is accredited or the lease is made in prescribed circumstances, or the lessor satisfies the Commissioner on reasonable grounds that he or she was satisfied that either of these two tests were satisfied. [Items 4 and 5]

3.11       Amendments are also being made to the table in Part 7A of the Act to update the descriptions and corresponding tariff classifications for two items, CD drives and disk drives (hard and floppy). The two new descriptions and classifications are added to the table, for personal computers in the form of systems and separate processing units or file servers. [Item 7]

3.12       The amendments address the inadequacies in the present penalties by increasing the penalty for false quoting and the penalty for a person falsely representing himself or herself to be accredited, or a transaction to be authorised. The penalty specified by section 91 is increased from $2000 to 50 penalty units. The penalty specified by subsection 91ZE(1) is increased from 20 penalty units to 50 penalty units. These penalties will now be consistent with those applicable to other similar offences. [Items 8 and 11]

Application

3.13       The new rules for exported goods will start from a date to be prescribed to give exporters time to apply for accreditation. The corrections to the table in Part 7A of the Act will apply from the date of introduction of the Bill. The new penalties will apply from the date of Royal Assent. [Item 12]



C hapter 4

Temporary importation of goods

Overview

4.1         Items 1, 2 and 3 of Schedule 3 to the Bill will amend the Sales Tax Assessment Act 1992 to ensure that goods imported into Australia under a temporary importation exemption, used in Australia, exported and then re-imported are subject to sales tax at the time of the later importation.

Summary of the amendments

Purpose of the amendments

4.2         The amendments propose to overcome a deficiency in the sales tax law which allows certain re-imported goods to avoid sales tax.

Date of effect

4.3         Any re-importation of certain goods which occurred after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997. [Item 4]

Background to the legislation

4.4         Wholesale sales tax applies to assessable dealings with goods produced in Australia, or imported into Australia.  Goods which have been previously used in Australia are not subject to sales tax.

4.5         The sales tax law allows exemption from sales tax for goods which are imported for short periods.  The special temporary importation provisions are intended to cover goods temporarily imported, for example, by a visiting tourist or for an exhibition, promotion or other special event. Under these provisions and the Sales Tax Assessment Regulations, goods can be imported for periods less than twelve months free of sales tax provided a security or undertaking is given and the goods are exempt from customs duty.

4.6         There is evidence that these provisions have been used in an unintended manner. Goods have been imported for a short period under the special temporary importation provisions.  After the goods have been returned overseas, they have been re-imported on a permanent basis free of sales tax because they have been previously used in Australia.

Explanation of the amendments

Meaning of Australian-used goods

4.7         New section 9B applies if Australian-used goods were previously brought into Australia on a temporary basis under new section 51A and the goods were exported and later imported. [Item 1]

4.8         The imported goods are not treated as Australian-used goods (and therefore exempt from sales tax) solely because the goods have been applied to own use when previously brought into Australia under the new section 51A . [Item 1] The effect of this provision is that these goods when re-imported may now be subject to sales tax.

Goods imported on temporary basis

4.9         In remedying this deficiency in the law the opportunity has been taken to amalgamate Regulation 10 (goods brought into Australia on a temporary basis) and Regulation 11 (disposal of goods brought into Australia on a temporary basis) and to put those requirements into the primary legislation as new section 51A . This has been done in order to improve the structure of the sales tax law by having the relevant requirements relating to the temporary importation exemption in the primary legislation.

4.10       New subsection 51A(1) provides that no tax is payable on a local entry if all the following conditions are satisfied:

      subsection 162(1) of the Customs Act 1901 (which deals with goods not formally entered for home consumption) applies to the goods;

      a Collector of Customs has been given security or an undertaking which satisfies the Collector for the payment of an amount equal to the sales tax which otherwise would have been payable for the dealing;

      the Collector of Customs has agreed under subsection 162(1) of the Customs Act 1901 for the person to take delivery of the goods; and

      the relevant regulations made under section 162 are satisfied. [Item 2]

4.11       A security or an undertaking given under new subsection 51A(1) relating to a dealing of goods may be enforced according to its terms if:

      the goods have been dealt with in a way that does not satisfy new subsection 51A(1) ; or

      the goods are exported contrary to subregulation 124(3) of the Customs Regulations (which requires that the goods are examined by a Customs Officer and an export entry is made); or

      the goods are not exported within the time given under subsection 162(3) of the Customs Act 1901 .

If the goods are exported and there is no contravention of these requirements, a security must be returned to the person and an undertaking may not be enforced.

4.12       New subsection 51A(3) provides that no tax is payable on a local entry if all the following conditions are satisfied:

      subsection 162A(1) of the Customs Act 1901 (which deals with goods that are formally entered for home consumption) applies to the goods;

      the Chief Executive Officer of Customs has accepted a security or an undertaking for the payment of an equivalent amount of sales tax that would otherwise have been payable for the dealing; and

      a Collector of Customs has agreed under subsection 162A(2) of the Customs Act 1901 for the person to take delivery of the goods.

4.13       A security or an undertaking given under new subsection 51A(3) relating to a dealing of goods may be enforced according to its terms if:

      the goods are dealt with in a way that does not comply with subregulation 125B(1) of the Customs Regulations (which restricts what can be done with goods imported under section 162A) without the agreement of the Chief Executive Officer of Customs; or

        paragraph 162A(5)(a) or (b) of the Customs Act 1901 applies to the goods.

If the goods are exported and there is no contravention of these requirements, a security must be returned to the person and an undertaking may not be enforced.

4.14       New subsection 51A(5) provides that no tax is payable on a local entry if the goods are specified in a valid instrument under subregulation 125A(2) of the Customs Regulations (which deals with goods which are to be used in events of national significance) unless the goods are dealt in a way that does not comply with subregulation 125B(2) of those Regulations.

4.15       In the proposed new section 51A , Collector has its meaning under the Customs Act 1901.

4.16       Item 3 makes a consequential amendment to LE14 of Table 2 in Schedule 1 of the Sales Tax Assessment Act 1992 .

4.17       The amendments apply to the re-importation of certain goods which occurred after 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997. [Item 4]