Peter Costello

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Input Taxed Supplies not Affected by no ABN Withholding Rules

NO.048

Input Taxed Supplies not Affected by no ABN Withholding Rules

The Treasurer announced today that supplies that are wholly input taxed under GST will not be subject to no ABN withholding.

Input taxed supplies include, for example, supplies of residential premises by sale or lease and financial supplies.

Under the no ABN withholding rules if a business does not quote an ABN the purchasing business has to withhold 48.5% of the payment.

The main aim of the no ABN withholding rules is to ensure that the right amount of income tax is paid. In addition, the ABN will make it easier for business by effectively eliminating multiple government registration numbers.

Income payments by the financial services industry, such as interest and dividends, are already subject to a no-Tax File Number withholding and there would be little gained in applying no ABN withholding to financial services.

Residential rent and sales of residential properties are not generally enterprise to enterprise transactions and usually involve at least one person operating in a private domestic capacity. The no ABN withholding rules will apply only to enterprise to enterprise transactions and are not intended to apply where the transaction is effectively private consumption.

Accordingly, when the New Tax System commences on 1 July, no ABN withholding will not apply to supplies that are input taxed under the GST.

CANBERRA
9 June 2000

9 Jun 2000

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