NO.096

The Government has today introduced into Parliament the Taxation Laws Amendment Bill

(No. 8) 2000 containing minor and technical changes to improve the operation of the A

New Tax System (Goods and Services Tax) Act 1999 and related legislation. As

previously announced on 14 September 2000, these changes address issues that have

been raised by tax practitioners, industry representatives, the Australian Taxation Office

and some States and Territories.

The Bill contains no substantive policy issues, but there are several measures which

increase administrative simplicity and compliance that will be welcomed by business. They

include measures that:

• increase flexibility to revoke monthly tax period elections;
• change the way debts are offset against Business Activity Statement (BAS) refunds; and
• increase flexibility to cancel GST registrations.

Entities will generally lodge GST returns on a quarterly basis, although some entities

are required to lodge monthly. Eligible entities may elect to account monthly by applying

to the Commissioner of Taxation on the ABN application form. Under current arrangements,

once this choice is made, the entity must use monthly tax periods for at least 12 months

before it can apply to the Commissioner to revert to using quarterly tax periods. The

Commissioner currently has no discretion to reduce this period.

This Bill will allow the Commissioner greater flexibility to revoke the monthly

election and allow quarterly tax periods if the entity so requests. The Commissioner may

backdate the effect of the revocation to 1 July 2000. This measure will substantially

reduce the compliance costs of affected businesses and non-profit bodies by reducing the

frequency with which these entities are required to account for GST.

This Bill gives the Commissioner the discretion to be able to refund a running account

balance surplus or credit rather than apply it against a tax debt (other than a BAS

amount) that is due but not yet payable. The changes to the refunding of BAS amounts will

ensure businesses benefit from receiving BAS refunds without having them offset against

other debts that are due but not payable for up to several months after the BAS is lodged.

An entity can choose to register for GST if it carries on an enterprise but its annual

turnover is below the registration turnover threshold. Once an entity is registered for

the GST, it must apply to the Commissioner if it wishes to have its registration

cancelled. Under current provisions, the Commissioner cannot cancel an entity’s GST

registration unless it has been registered for at least 12 months at the time of

application.

This Bill allows the Commissioner, in certain circumstances, to cancel the GST

registration of an entity where an application to cancel its registration has been made

before the entity has been registered for 12 months. This measure takes effect from the

date of Royal Assent and will avoid increased compliance costs for small businesses and

non-profit bodies.

CANBERRA

12 October 2000

Contact: David Alexander (Tax Reform Legislative Unit) 02 6277 6390