EXPLANATORY STATEMENT
Issued by Authority of the Minister for Revenue and Assistant Treasurer
Purpose
The purpose of the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2004 (No. 2) [Determination 2004 (No. 2)] is to list those taxes, fees and charges that are excluded from the scope of the goods and services tax (GST) base.
Background
Division 81 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that the GST applies to payments of taxes, fees and charges, except those taxes, fees and charges that are excluded from the GST by a determination of the Treasurer. Specifically, Section 81-5 of the GST Act deems all payments of taxes, fees or charges to be consideration for a supply except for those specified in a written determination of the Treasurer. This section is designed to allow taxes, fees and charges to be excluded from the scope of the GST base.
Parallel to the legislative implementation of the GST package, the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (IGA) was signed in June 1999. This document outlined a process for deciding the taxes, fees and charges to be included in the determination under Division 81 of the GST Act. The IGA provided that it would be the role of the Ministerial Council (the Commonwealth, State and Territory Treasurers) to compile the list of taxes and other compulsory charges that would be outside the scope of the GST. This would require on‑going review and adjustments as necessary.
The Commonwealth, States and Territories decided that the following taxes, fees and charges should be included on the list:
- taxes that are in the nature of a compulsory impost for general purposes; and
- regulatory charges that do not relate to particular goods or services.
As part of the on-going review and adjustment process, Determination 2004 (No. 2) was made. The Ministerial Council compiled and agreed to the determination that was made by the Minister for Revenue and Assistant Treasurer on 7 December 2004 and notified in a Special Gazette on 21 December 2004.
Determination 2004 (No. 2) revoked the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2004 (Determination 2004) and replaced it with a comprehensive new determination.
Explanation of the determination
The determination has five sections:
Section 1: specifies the name of the determination as the A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2004 (No. 2);
Section 2: specifies that the determination commences on 1 January 2005;
Section 3: defines ‘Act’ as meaning the A New Tax System (Goods and Services Tax) Act 1999;
Section 4: is the operative provision. It provides that the taxes, fees and charges listed in Schedule 1 will not be consideration for the purposes of the GST.
Section 5: specifies that Determination 2004 is repealed.
Schedule 1
Schedule 1 lists the taxes, fees and charges that meet the general principles set out in the IGA and that have been agreed by the Ministerial Council to be outside the scope of the GST.
Schedule 1 is divided into the nine relevant jurisdictions: the Commonwealth, the six States and two Territories. Local government taxes, fees and charges are included in the appropriate State or Territory list. Within each jurisdiction, the taxes, fees and charges have been classified according to the relevant portfolio. The taxes, fees and charges are identified by their name, the relevant statute and, where necessary, a more detailed description.
Accordingly, taxes, fees and charges specified in Schedule 1 will not be regarded as consideration for the purposes of the GST. Therefore, they will not be levied inclusive of GST. A government charge that is not included in Schedule 1 could be subject to GST where it constitutes consideration for a taxable supply.
Determination 2004 (No. 2) took effect from 1 January 2005.
Overview
The A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2004 (No. 2) was enacted to define the specific taxes, fees, and charges that are excluded from the GST base, in accordance with the A New Tax System (Goods and Services Tax) Act 1999. This Determination was introduced to provide clarity and specificity to the types of taxes and charges that are exempt from the GST, ensuring that only those payments that constitute consideration for a supply are subject to the GST. The enacting body for this determination was the Minister for Revenue and Assistant Treasurer, acting under the authority granted by the GST Act. The policy objective was to align the exemptions with the principles outlined in the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, facilitating a streamlined application of the GST across different jurisdictions in Australia. This determination, which took effect from 1 January 2005, aimed to address the need for a clear and comprehensive list of exemptions to avoid ambiguity and potential disputes regarding the GST applicability to various taxes, fees, and charges.
Scope and Application
The A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2004 (No. 2) outlines the taxes, fees, and charges that are excluded from the scope of the goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999. This determination applies to all Commonwealth, State, and Territory taxes, fees, and charges that are specified as exempt in Schedule 1. The purpose of this legislation is to provide clarity on which taxes, fees, and charges are exempt from GST to ensure they are not levied inclusive of GST. The exclusions are based on the principles set out in the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, and the list of exempt taxes, fees, and charges is compiled and agreed upon by the Ministerial Council. These exemptions apply nationally across Australia, and the determination came into effect on 1 January 2005, superseding the previous determination from 2004. This legislative instrument allows for ongoing review and adjustments to the list of exempt taxes, fees, and charges as necessary, reflecting changes in policy or economic conditions.
Key Provisions
The A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2004 (No. 2) (the Determination 2004 (No. 2)) lists the taxes, fees and charges that are excluded from the scope of the goods and services tax (GST) base (Section 4). This Determination, which took effect from 1 January 2005, replaces the earlier Determination 2004 and was compiled by the Ministerial Council, comprising the Commonwealth, State and Territory Treasurers, in accordance with the intergovernmental agreement on the reform of Commonwealth-State financial relations. The determination provides a comprehensive list of taxes, fees and charges that are exempt from the GST, based on their nature and purpose.
The obligations imposed by this legislation primarily concern the exclusion of certain taxes, fees and charges from the GST base. Section 4 of the Determination 2004 (No. 2) mandates that the taxes, fees and charges listed in Schedule 1 are not to be regarded as consideration for the purposes of the GST. This means that any government charge not specified in Schedule 1 might be subject to GST if it constitutes consideration for a taxable supply. The Ministerial Council's role, as outlined in Division 81 of the A New Tax System (Goods and Services Tax) Act 1999, is to compile and agree on the list of exempt taxes, fees and charges, ensuring ongoing review and adjustment as necessary.
The Determination 2004 (No. 2) does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach within its text. However, it is essential to note that any non-compliance with the provisions of the A New Tax System (Goods and Services Tax) Act 1999, including the Determination 2004 (No. 2), could potentially lead to legal consequences. For instance, if a tax, fee or charge not listed in Schedule 1 is incorrectly levied inclusive of GST, it might result in penalties under the GST Act. The maximum penalties for GST-related offences can include substantial fines and, in some cases, imprisonment, depending on the nature and severity of the breach. Compliance with the Determination is crucial to avoid these potential consequences.