Peter Costello

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GST Legislation: Royal Assent



The GST legislation passed by Parliament last week has today received Royal Assent.

Royal Assent is an important date for the transition to the New Tax System for two reasons.

  • Twenty-one days from the date of Royal Assent, that is as from 29 July, the 32 per cent wholesale sales tax rate will be reduced to 22 per cent for many goods.
  • As from today transitional GST-free treatment will no longer be available for supplies made under new contracts which span 1 July 2000.

Reduction in sales tax

As from 29 July, the following goods will have the rate of wholesale sales tax reduced from 32 per cent to 22 per cent:

  • tape recorders, video recorders, radios, televisions and stereo players;
  • watches, clocks, watch bands;
  • cameras, including video cameras (but not film);
  • binoculars and opera glasses;
  • photographic enlargers;
  • film and slide projectors, viewers and screens;
  • picture tubes for television receivers;
  • automatic photo booths;
  • slot machines for gambling and amusement operated by coins or tokens;
  • studs, tie bars, tie pins and cuff links;
  • precious metal goods and plated ware; and
  • parts for many of these goods.

Where wholesale sales tax has been borne on these goods and they are held for sale from 29 July, a transitional credit may be claimed for the reduction in the wholesale sales tax rate. Retailers entitled to claim the credit will be able to calculate the amount of credit by reference to the invoice obtained when they purchased the goods. This will show the amount of sales tax at the rate of 32 per cent. The credit entitlement will be 10/32 of this amount.

A retailer entitled to a credit can claim a refund in one of two ways:

  • if they are registered for sales tax it can be deducted from their net sales tax remittance (monthly or quarterly); or
  • if they are unregistered (or registered and don¬ít have a sales tax liability) it can be claimed by lodging a refund claim form directly with the ATO.

Contracts which span 1 July 2000

As a general rule, if a business enters into a contract as from today, then supplies of goods and services provided on or after 1 July 2000 will be subject to GST ( some goods and services are GST free while others are input taxed). The supplier of the goods and services on or after 1 July 2000 will therefore have a GST obligation.

Under the transitional arrangements, where a supplier entered into a contract before today with another business (and that business is entitled to full input tax credits) for the supply of goods and services from 1 July 2000, those goods and services are GST-free until 1 July 2005 or at the first opportunity to review the price, whichever is the earlier.

For supplies where the recipient is not entitled to full input tax credits (generally private consumers are not entitled to full input tax credits), GST-free treatment only applied if the contract was made before 2 December 1998. These supplies of goods and services are GST-free until 1 July 2005, or the first review opportunity, whichever is the earlier.

Businesses entering into new contracts from today for the supply of goods or services on or after
1 July 2000 will need to consider their GST liability when entering into their contracts.


Under a contract made today, a maintenance service company undertakes to maintain certain equipment for a five-year period beginning 1 August 1999. The maintenance provider will have a GST liability in respect of that part of the contract period from 1 July 2000. In calculating the GST liability, the value of the supply under the contract will be prorated over the five-year period. The maintenance provider, in setting the contract price, will need to consider the GST liability for the period from 1 July 2000.

8 July 1999

For further information from the ATO on:

Contracts spanning 1 July 2000: Bruce Quigley (07)32138900

Reduction in WST: Barry Russell (02) 62161701

8 Jul 1999

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