Sales Tax Assessment Regulations (Amendment) 1995 No. 86
EXPLANATORY STATEMENT
STATUTORY RULES 1995 No. 86
Issued by the Authority of the Assistant Treasurer
Sales Tax Assessment Act 1992
Sales Tax Assessment Regulations (Amendment)
Subsection 131 (1) of the Sales Tax Assessment Act 1992 (the Act) provides that the GovernorGeneral may make regulations prescribing matters necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The amendments contained in the regulations are technical changes required in consequence of amendments to the Migration Act 1958, the Migration Regulations and the Sales Tax Assessment Regulations (the STAR). One amendment deals with the provisions covering tax free sales of goods to foreign visitors to Australia. The other deals with the provisions covering evidentiary certificates where the Commissioner of Taxation is taking action against a person for the recovery of sales tax.
The sales tax exemption for foreign visitors to Australia is intended to apply to goods purchased by visitors who will take the goods with them as accompanied baggage when they leave. The current sales tax regulations covering tax free sales to foreign visitors require the visitors to hold entry permits granted in relation to their visitor visas under the Migration Act 1958. However the Migration Act 1958 and the Migration Regulations have been amended so that from 1 September 1994 entry permits are no longer issued to visitors. This has made it impossible for foreign visitors meet the requirements for sales tax exemption. A retrospective amendment to the STAR is needed to restore the entitlement.
Section 5(c) of the STAR defines "eligible foreign traveller" as being a person defined to be an eligible foreign traveller by regulations made for the purposes of the definition. The proposed amendment alters the definition of eligible foreign traveller in paragraph 5(c) of the STAR by removing the reference to entry permits and listing the specific classes of persons who can qualify for visitor visas under the Migration Regulations.
The retrospective effect of the amendment means that vendors are not liable for sales tax on sales of goods to foreign visitors after 1 September 1994 merely because the visitors did not possess entry permits. The amendment ensures that all of the classes of foreign visitors who could qualify for the exemption prior to 1 September 1994 will continue to qualify, and therefore be able to buy goods free of sales tax for export as accompanied baggage.
The second amendment alters one of the evidentiary certificate requirements in regulation 18 of the STAR. Regulation 18 prescribes the information which must be included in an evidentiary certificate to be used by the Commissioner of Taxation when taking action against a person to recover unpaid sales tax. Currently, paragraph 18(b) of the STAR requires the Commissioner to certify that an assessment of sales tax payable by a person was made against the person in respect of the year set out in the certificate.
The sales tax legislation does not impose a liability to taxation in respect of any particular year. Section 16 of the Act establishes liability to tax on transactions with goods referred to as assessable dealings without reference to the period in which those dealings occur.
The reference to "year" in paragraph 18(b) of the STAR is inconsistent with the Act which does not require an assessment to be made in respect of a particular year or any other specific period. The requirement in paragraph 1 8(b) will therefore be that an assessment of sales tax payable by the person was made against the person. The amendment removes the reference to year in paragraph 18(b). The amendment operates retrospectively from 16 June 1994, the commencement date of Statutory Rules 1994 No. 194 which caused the inconsistency.
Both of the proposed amendments will have a retrospective effect. However, as neither adversely affects any person other than the Commonwealth, it is considered that section 48 of the Acts Interpretation Act 1901 will not be contravened.
Details of the regulations are as follows:
Regulation 1 - provides the retrospective commencements referred to above. It provides that regulation 3 is taken to have commenced on 1 September 1994, the commencement of the relevant amendments to the Migration Regulations referred to above (subregulation 1.1). It also provides that regulation 4 is taken to have commenced on 16 June 1994, the commencement of Statutory Rules 1994, No. 194 (subregulation 1.2).
Regulation 2 - provides for the amendment of the STAR.
Regulation 3 - omits paragraph 5(c) of the STAR and substitutes subparagraphs 5(c)(i) and 5(c)(ii) Which contain the classes of persons qualifying for visitor visas under the Migration Regulations and therefore entitled to purchase goods free of sales tax provided the goods are taken out of Australia as accompanied baggage.
Regulation 4 - effectively amends paragraph 18(b) by removing the requirement that the certificate referred to in regulation 18 of the STAR must refer to the year in which the assessment of sales tax was made.
Overview
The Sales Tax Assessment Regulations (Amendment) 1995 No. 86EXPLANATORY STATEMENT, issued under the authority of the Assistant Treasurer, amends the Sales Tax Assessment Regulations 1992 to address two issues arising from changes in the Migration Act 1958 and its regulations. The first issue concerns the sales tax exemption for foreign visitors purchasing goods for export as accompanied baggage. Prior to 1 September 1994, visitors needed an entry permit to qualify for this exemption, but as entry permits were abolished, a retrospective amendment is necessary to ensure that visitors can still claim the exemption based on their visitor visas. The second issue pertains to evidentiary certificates used by the Commissioner of Taxation when recovering unpaid sales tax, where the reference to a specific year in the assessment is inconsistent with the broader sales tax legislation. This amendment ensures that the requirement for an assessment is met without the need to specify a particular year. Both amendments are retrospective but are considered not to contravene section 48 of the Acts Interpretation Act 1901 as they do not adversely affect any person other than the Commonwealth.
Scope and Application
The Sales Tax Assessment Regulations (Amendment) 1995 No. 86 pertains to the Sales Tax Assessment Act 1992 and is aimed at addressing technical changes necessitated by modifications to the Migration Act 1958, the Migration Regulations, and the Sales Tax Assessment Regulations (STAR). This amendment applies to foreign visitors to Australia and vendors who sell goods to such visitors, as well as to the Commissioner of Taxation and individuals or entities involved in sales tax recovery processes. The scope of the amendment is national, affecting all jurisdictions within Australia in alignment with the federal nature of the Sales Tax Assessment Act. The changes are not limited to specific industries but rather encompass all sales transactions involving eligible foreign travellers and evidentiary certificates used in sales tax recovery actions. The regulation excludes any entities or persons not directly related to the specified sales tax processes and does not impose any new financial thresholds or limitations. The amendment operates retrospectively, providing clarity and legal certainty to both vendors and visitors by adjusting the regulatory framework to reflect the legislative changes in the Migration Act and Regulations.
Key Provisions
The Sales Tax Assessment Regulations (Amendment) 1995 No. 86 (the Amendment) brings about two key changes under the Sales Tax Assessment Regulations 1992 (the STAR). The first amendment, detailed in regulation 3, addresses the sales tax exemption for foreign visitors. Regulation 5(c) of the STAR defines "eligible foreign traveller" and previously required these visitors to hold entry permits under the Migration Act 1958. However, the Migration Act 1958 and the Migration Regulations have been amended to cease the issuance of entry permits from 1 September 1994, making it impossible for visitors to meet the sales tax exemption requirements. The Amendment removes the reference to entry permits and lists the specific classes of persons who can qualify for visitor visas under the Migration Regulations, thereby ensuring the sales tax exemption remains applicable to eligible foreign visitors who take goods out of Australia as accompanied baggage.
The second amendment, detailed in regulation 4, modifies regulation 18 of the STAR, which prescribes the information required in an evidentiary certificate for sales tax recovery actions by the Commissioner of Taxation. Regulation 18(b) previously required the Commissioner to certify that an assessment of sales tax was made for a specific year, which is inconsistent with the Sales Tax Assessment Act 1992 that imposes tax liability on transactions without regard to a particular year. The Amendment removes the reference to a specific year in regulation 18(b), aligning the evidentiary certificate requirements with the Act's provisions.
The obligations imposed by the Amendment require vendors to continue to offer sales tax-free purchases to eligible foreign visitors who take goods out of Australia as accompanied baggage. Vendors must ensure they identify and apply the sales tax exemption correctly to qualifying foreign visitors. Additionally, the Commissioner of Taxation must now certify that an assessment of sales tax payable by a person was made, without needing to specify the year in which the assessment was made, when taking action to recover unpaid sales tax.
Breach of the provisions within the Sales Tax Assessment Act 1992 or the Sales Tax Assessment Regulations 1992 can result in penalties. For instance, non-compliance with tax assessments or failure to correctly apply tax exemptions may lead to fines and legal actions. The specific penalties are not detailed within the Amendment but generally involve fines as stipulated by the Sales Tax Assessment Act 1992. The maximum penalties would be consistent with those outlined in the principal Act, which can include substantial fines for both individuals and corporations depending on the severity and intent of the breach.