Indirect tax – refund restrictions and four year amendment period
In line with the Federal Treasurer’s announcement on 6 May 2008, the GST refund provisions will be amended to ensure that they apply even if the transaction for which the tax was paid is found not to be a supply. The Federal Government will also restore the intended four year time limit on refunds and liabilities for indirect taxes. Both measures will take effect from 1 July 2008.
Luxury car tax (LCT)
Luxury car tax (LCT) applies to cars whose GST-inclusive value exceeds the LCT threshold ($57,123). Typically, the tax is:
- payable when a car is sold or imported at the retail level in addition to any GST payable, and
- collected and remitted to the ATO by car dealers (although private buyers who import such cars can also be liable).
Although LCT is payable in addition to GST, it is not payable on the full value of the vehicle. It is currently payable on 25 per cent of the GST-exclusive value that exceeds the LCT threshold. The rate from 1 July 2008 will jump to 33 per cent.
The impact of the increase remains to be seen particularly given the range of factors relevant to pricing (eg movements in the AUD exchange rate for imported cars). However, there will no doubt be some who will move to make their purchases before the start date.
Crude oil excise – condensate
The current exemption of condensate (a light crude oil extracted from natural gas) from the crude oil excise will be removed with effect from midnight (AEST) on 13 May 2008. Under the new arrangements, condensate production from petroleum fields located in the North West Shelf Project area and onshore Australia will be subject to the same excise rates as those applicable to petroleum fields discovered after 18 September 1975. For example, the maximum rate of excise applicable to production from a field in excess of 800 megalitres (around 5 million barrels) per annum will be 30 per cent of the value of production.
As part of this measure, the Western Australian Government will be provided with ongoing compensation for the loss of shared Offshore Petroleum Royalty revenue resulting from imposing the crude oil excise on condensate.
Excise and customs duty – increased rates on “ready to drink” beverages
The excise and excise-equivalent customs duty rate applying to “other excisable beverages not exceeding 10 per cent by volume of alcohol” has been increased to the same rate as for full strength spirits, on and from 27 April 2008. These “other excisable beverages”, which include ready-to-drink beverages are now subject to excise duty and an equivalent customs duty at $66.67 per litre of alcohol content.
The move is expected to raise $2 billion in revenue over four years, to go towards preventative health program.
Customs duty on imported tobacco – revenue protection measure
The Customs legislation will be amended to clarify the existing references to “tobacco content” so that the non-stick excise-equivalent customs duty on tobacco is calculated on the total weight of the goods, as intended. This measure will have effect from the date of Royal Assent of the amending legislation.
Excise-equivalent goods – coverage by Tariff Concession Orders (TCO)
The Federal Government will address an unintended outcome where importers are able to avoid paying excise-equivalent customs duties on certain imported products by obtaining a Tariff Concession Order (TCO). TCOs remove the protective tariff from imported goods where no substitutable goods are produced in Australia. Most excise-equivalent goods are currently prevented from being covered by TCOs.
Export Market Development Grants Scheme (EMDG)
Additional funding of $50 million in 2009-10 will be provided for the Export Market Development Grants (EMDG) Scheme which provides small and medium sized Australian businesses with taxable grants to reimburse a proportion of eligible export promotion costs. Legislation to give effect to a number of enhancements which will apply to export promotional expenditure incurred from 1 July 2008 (affecting grant payments made in 2009-10), was introduced into Federal Parliament on 20 March 2008.
Status of previously announced measures
The Federal Government has decided to proceed with the following indirect tax measures, although legislation is not expected to be introduced before 2009:
- measures to allow small business to defer the settlement of excise and excise-equivalent customs duties to a monthly cycle, rather than the existing weekly cycle, and
- measures to enhance and streamline eligibility for refunds, remissions and drawbacks of excise and excise-equivalent customs duty.
Decisions have not yet been reached in relation to previously announced measures relating to the Energy Grants (Cleaner Fuels) Scheme and Fuel Tax reforms concerning alternative fuels.
