EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 208
Issued by authority of the Assistant Treasurer
A New Tax System (Goods and Services Tax Transition) Act 1999
A New Tax System (Goods and Services Tax Transition) Amendment Regulations 2010 (No. 1)
Section 25 of the A New Tax System (Goods and Services Tax Transition) Act 1999 (the Act) provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
Subsection 15L(3) of the Act defines the term ‘New Tax System changes’ and paragraph 15L(3)(d) provides that its meaning includes any other changes prescribed by the regulations for the purposes of this definition.
The purpose of the Regulations is to amend the A New Tax System (Goods and Services Tax Transition) Regulations 2000 to expand the meaning of the term ‘New Tax System changes’ by prescribing certain other changes for the purposes of the definition.
The term ‘New Tax System changes’ applies to GST in the context of 'arbitrated offers' made in relation to determining the consideration for supplies made under a long-term non-reviewable contract on or after 1 July 2005.
Section 15L of the Act provides for arbitration where there is an offer to change the consideration for a supply. Part of the arbitration process involves taking into account the impact of ‘New Tax System changes’ on the supplier’s cost and expenses.
The need for the amending Regulations has arisen as a consequence of the Statute Stocktake (Regulatory and Other Laws) Act 2009 (the Stocktake Act) which removed certain provisions from the Trade Practices Act 1974 (TP Act) that defined ‘New Tax System changes’ to include any other changes prescribed by regulation. These other changes were prescribed in Part 4 of the Trade Practices Regulations 1974 (the TP regulations).
As a result of changes made to the Act by the Stocktake Act, the term ‘New Tax System Changes’ is now defined in the Act in identical terms to ensure continuity of its meaning. The provisions from Part 4 of the TP Regulations are now replicated under the amending Regulations with some minor changes to reflect modern drafting practices.
The Regulations commenced on the day after they were registered on the Federal Register of Legislative Instruments.
A preliminary assessment of the compliance costs of the amending Regulations found the expected compliance costs for taxpayers to be low. Accordingly, a Regulation Impact Statement was not required and has not been prepared.
Public consultation on the Regulations was not undertaken as the regulations which existed under the TP Act are largely replicated under the new provisions.
Overview
The A New Tax System (Goods and Services Tax Transition) Amendment Regulations 2010 (No. 1) were enacted to address the legislative gap arising from the Statute Stocktake (Regulatory and Other Laws) Act 2009, which removed certain provisions from the Trade Practices Act 1974 that previously defined the term "New Tax System changes." This Act was introduced to ensure the continuity of the term's meaning within the context of the A New Tax System (Goods and Services Tax Transition) Act 1999, particularly in relation to the arbitration process for offers to change consideration for supplies under long-term non-reviewable contracts made after 1 July 2005. The objective of these regulations is to amend the A New Tax System (Goods and Services Tax Transition) Regulations 2000 by incorporating the necessary changes to align with the Stocktake Act, thereby maintaining the integrity and effectiveness of the tax system as intended. The regulations were issued by authority of the Assistant Treasurer and commenced on the day following their registration on the Federal Register of Legislative Instruments.
Scope and Application
The A New Tax System (Goods and Services Tax Transition) Amendment Regulations 2010 (No. 1) are an extension of the A New Tax System (Goods and Services Tax Transition) Act 1999, designed to refine and clarify the definition of 'New Tax System changes' as they pertain to the arbitration of offers in long-term non-reviewable contracts post 1 July 2005. The Regulations are particularly relevant to entities and persons involved in such contracts, aiming to ensure that any changes related to GST are appropriately considered in the arbitration process. These Regulations apply across the Commonwealth of Australia, providing a national scope for the prescribed changes. The Regulations themselves do not explicitly state exclusions or thresholds but are tailored to follow the adjustments mandated by the Statute Stocktake (Regulatory and Other Laws) Act 2009, which removed certain provisions from the Trade Practices Act 1974 that previously defined 'New Tax System changes'. Consequently, the amending Regulations incorporate the former definitions and processes, ensuring that there is no discontinuity in the interpretation or application of GST-related changes. The Regulations came into effect immediately upon their registration on the Federal Register of Legislative Instruments, and while they are made under the authority of the Assistant Treasurer, they do not require a Regulation Impact Statement or public consultation due to their alignment with previous regulations and the low expected compliance costs for taxpayers.
Key Provisions
The New Tax System (Goods and Services Tax Transition) Amendment Regulations 2010 (No. 1) amend the existing regulations to update the definition of "New Tax System changes" as outlined in section 15L(3)(d) of the A New Tax System (Goods and Services Tax Transition) Act 1999. These changes are necessary following the removal of certain provisions from the Trade Practices Act 1974 by the Statute Stocktake (Regulatory and Other Laws) Act 2009, which previously defined "New Tax System changes". The term is now explicitly defined in the Act itself, and the amending Regulations replicate the previous provisions from the Trade Practices Regulations 1974, with some adjustments to align with modern drafting practices. The Regulations came into effect the day after their registration on the Federal Register of Legislative Instruments.
The Regulations impose certain obligations and requirements on parties involved in the arbitration of offers made under long-term non-reviewable contracts. Specifically, they define "New Tax System changes" to include changes in GST laws that affect the consideration for supplies made under such contracts from 1 July 2005 onwards. This definition is crucial for determining the impact on a supplier's costs and expenses during the arbitration process. Parties must adhere to these definitions to ensure that the arbitration of offers accurately reflects the changes brought about by the New Tax System, including GST implications.
There are no specific offences, penalties, or consequences outlined within these Regulations for breach. However, the accuracy and compliance with these definitions are essential, as any misapplication or non-compliance could lead to disputes or incorrect determinations in arbitration processes. Such disputes could potentially lead to legal consequences if they are challenged in court or other dispute resolution forums. The Regulations aim to ensure that the arbitration process remains fair and reflective of the true economic impact of the New Tax System changes, including those related to GST.