Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
1998-1999-2000
THE PARLIAMENT
OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
EXPLANATORY
MEMORANDUM
(Circulated by the authority of the
Minister for Finance and Administration,
the Hon John J Fahey
MP)
ISBN: 0642 435626
OUTLINE
The purpose of this Bill is to appropriate moneys to
Commonwealth entities to meet certain payments arising from the introduction of
the Goods and Services Tax (GST).
The appropriation will apply only
where the Commonwealth can recover the amount of the payment as an input tax
credit (recoverable GST) under the GST law.
The amounts of appropriation
shown in the Appropriation Bills 2000-2001 do not include an allowance for
recoverable GST. The figures represent the net amount that Parliament is asked
to allocate for particular purposes. This approach is in line with the accepted
accounting practice for GST, which specifies that revenues, expenses and assets
are to be recognised net of the amount of recoverable GST.
Consequently,
additional appropriation is required to cover the following payments that give
rise to recoverable GST:
• payments to suppliers to the extent of
the GST embedded in the acquisition price; and
• payments of GST on
creditable importations.
Financial Impact Statement
The
additional appropriation will have no effect on recorded revenues, expenses and
assets. It will not have any impact on the cash or Fiscal Budget
balances.
Some agencies may find it necessary to draw, for a short time,
on bridging finance that is available under current agency banking arrangements
in order to address the cash flow effects of the GST on departmental
expenditures.
NOTES ON CLAUSES AND SCHEDULE 1
Clause 1: Short
title
1. The short title of the Act will be the Financial
Management and Accountability Amendment Act 2000, reflecting that it will
amend the Financial Management and Accountability Act 1997.
2. The Act will commence on the day it receives the Royal Assent.
3. Clause 3 provides that each Act that is specified in a Schedule to the
Financial Management and Accountability Amendment Bill 2000 is amended or
repealed as set out in the Schedule. This is a standard provision. In fact,
only the Financial Management and Accountability Act 1997 is proposed to
be amended by the Schedule.
4. The effect of these subsections will be to increase an appropriation
by the amount of GST qualifying amount arising from acquisitions in respect of
the appropriation.
5. GST qualifying amount will be defined in new
subsection (7) to be an input tax credit or a decreasing adjustment. A
decreasing adjustment for an acquisition is defined in section 19-85 of
the A New Tax System (Goods and Services Tax) Act 1999 as the difference
between the corrected input tax credit amount and the previously attributed
input tax credit amount for the acquisition.
6. New subsection (1) will
provide for an appropriation to be increased immediately before a payment is to
be made in respect of an acquisition where a GST qualifying amount has arisen,
or will arise, for that acquisition. This subsection covers the normal
situation where it is known at the time of payment that an input tax credit has
arisen or will arise in respect of the acquisition. It also covers the
situation where an additional payment is made for the acquisition and it is
known that a decreasing adjustment will result from that payment.
7. New
subsection (2) will provide that where a payment for an acquisition has been
made and a GST qualifying amount later arises, the increase in the relevant
appropriation takes place when the GST qualifying amount arises. This
subsection covers payments made before 1 July 2000 (the date on which GST will
first apply). It would also cover a situation where a GST qualifying amount was
not envisaged at the time of the payment. An example of the latter situation is
where a decreasing adjustment arises on reassessment of the extent to which an
acquisition is creditable.
8. New subsection (3) will limit the increase
in the appropriation in respect of an acquisition to the total of the GST
qualifying amounts for that acquisition. This subsection will preclude, for
example, a situation whereby payment by instalments for the same acquisition
would result in an increase in appropriation, for each payment, of the full
amount of the input tax credit.
9. The effect of these subsections will be to increase an appropriation
by the amount of GST qualifying amount arising from importations in respect of
the appropriation.
10. New subsection (4) will provide for an
appropriation to be increased immediately before a payment of GST on an
importation is to be made under the appropriation where a GST qualifying amount
has arisen, or will arise, for that importation. This subsection covers the
normal situation where it is known at the time of payment that an input tax
credit has arisen or will arise in respect of the importation.
11. New
subsection (5) will provide that where a payment of GST on an importation has
been made and a GST qualifying amount later arises, the increase in the relevant
appropriation takes place when the GST qualifying amount arises. This
subsection covers a situation where a GST qualifying amount was not envisaged at
the time of the payment. An example is where a decreasing adjustment arises on
reassessment of the extent to which an importation is creditable.
12. New
subsection (6) limits the increase in the appropriation in respect of an
importation to the total of the GST qualifying amounts for that importation.
13. New subsection (7) contains definitions of terms used in the section.
Broadly, these attribute to ‘acquisition’, ‘GST’ and
‘importation’ the same meaning as those terms have in the GST
Act.
14. The definition of GST Act refers to Division 177 of the
GST Act which states Parliament's intention that the Commonwealth and its
entities should be notionally liable to GST where they cannot be made liable to
taxation by a Commonwealth law. Finance Minister's Directions will be made under
this Division to give effect to this intention. The result of these Directions
will be to require the payment and receipt of moneys by Commonwealth entities as
though those entities were liable to pay GST under the GST Act, and were
entitled to input tax credits and adjustments arising under that Act, and as
though payments between Commonwealth entities are real transactions requiring
appropriation.