Sales Tax (Exemptions and Classifications) (Excluded STBs) Regulations

Overview

The Sales Tax (Exemptions and Classifications) (Excluded STBs) Regulations 1997 No. 272 were enacted to address a specific gap identified in the Sales Tax (Exemptions and Classifications) Act 1992. These regulations were introduced to delineate which wholly-owned State and Territory Bodies (STBs) would be excluded from the Wholesale Sales Tax (WST) exemption under the Act. The problem these regulations aimed to solve was the need to clarify which STBs would not be exempt from WST, thereby subjecting them to the tax, in line with the Statement of Policy Intent (SOPI) from the 1994 Premiers' Conference. This legislative action was taken by the Australian Government under the authority of the Assistant Treasurer, ensuring compliance with the SOPI that mandated the Commonwealth to exempt all STBs from WST while requiring the States and Territories to implement equivalent regimes. The policy objective of these regulations is to achieve a consistent application of WST across different jurisdictions by clearly identifying which STBs are subject to the tax.

Scope and Application

The Sales Tax (Exemptions and Classifications) (Excluded STBs) Regulations 1997 applies to wholly-owned State and Territory Bodies (STBs) that are excluded from the Wholesale Sales Tax (WST) exemption under the Sales Tax (Exemptions and Classifications) Act 1992. These STBs, which are controlled by state or territory government entities, are identified as 'excluded STBs' in the regulations and are therefore subject to WST. The regulations were made under section 16 of the Act, which empowers the Governor-General to prescribe matters necessary for carrying out or giving effect to the Act. To comply with the Statement of Policy Intent agreed at the 1994 Premiers' Conference, which required the Commonwealth to exempt all STBs from WST, the Act was amended in 1995. However, the states and territories have subsequently sought to exclude some STBs from this exemption on administrative convenience grounds. The regulations, which commenced on the date of gazettal, specify those STBs that are excluded from the WST exemption and require the consent of all state Premiers and Territory Chief Ministers. The scope of the regulations is national, applying to STBs across all states and territories in Australia.

Key Provisions

The main sections of the Sales Tax (Exemptions and Classifications) (Excluded STBs) Regulations 1997 (the Regulations) provide for the exclusion of certain State and Territory Bodies (STBs) from the Wholesale Sales Tax (WST) exemption under the Sales Tax (Exemptions and Classifications) Act 1992 (the Act). Specifically, Section 4 of the Regulations identifies the STBs that are to be excluded from the WST exemption and hence subject to WST. This is achieved through a list of specified entities that, at the time prescribed, are considered 'excluded STBs' under subsection 3D(6) of the Act. The Regulations impose specific obligations on the STBs that are identified as 'excluded STBs'. These entities are required to account for and remit WST on their taxable supplies, just as any other taxable entity would under the Act. Additionally, the Regulations mandate that the entities must comply with all other provisions of the Act, including record-keeping and reporting requirements, to ensure transparency and compliance with the tax laws. Failure to comply with the obligations set out in the Regulations can result in civil and criminal penalties. Under Section 18 of the Act, a person who contravenes a provision of the Act or the Regulations may be liable to a penalty. The maximum penalty for a corporation can be up to 10,000 penalty units, while for an individual, it can be up to 2,000 penalty units. Additionally, ongoing failure to comply may lead to criminal prosecution, resulting in further penalties, including fines and imprisonment. The precise penalties depend on the nature and severity of the breach, as outlined in the Act.