Tuesday, March 29, 2005

A New Tax System (Goods and Services Tax Imposition (Recipients) - Customs) Act 2005 (Cth)

Wow, now this is boring. 10% GST is payable as of I July 2005 as far as such GST would be imposed on the recipient of a taxable supply and is a customs duty.

When the GST system was introduced, there was a 5 year grace period given to long term contracts, to which the GST did not apply. This grace period ends on 1 July 2005 and this Bill, along with its friends the General and Excise Bills, provide for the ending of this grace period.

So, long term contracts which were not subject to GST, such as for example 20 year leases, now are going to be subject to that GST. Bad luck for tenants, but then again we all pay GST so why shouldn't you!

To the extent the GST imposition is not a customs duty or an excise, it will apply to long term non-reviewable contracts as of 1 July 2005.

Anyone with a long term contract, better get your skates on and talk to the recipient of the supply. Let them know they are going to get slugged the extra 10%.

Consider the Excise and General Bills both commented upon. They are substantially the same.

Also, the Tax Laws Amendment (Long Term Non-Reviewable Contracts) Act 2005, which amends the principal GST (ie 2000 Acts) legislation, provides for the negotiation of a new contract rate, such as rental payment, given the imposition of the GST. I really hate tax legislation, but basically it seems that if the parties cannot agree on a new payment, it goes to arbitration etc etc.

In essence, long term contracts, which in 2000 were not subject to GST, now will be. This is the important bit. Whew...


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