Commonwealth Numbered Regulations - Explanatory Statements

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SALES TAX ASSESSMENT REGULATIONS 1992 NO. 365

EXPLANATORY STATEMENT

STATUTORY RULES 1992 No. 365

ISSUED BY THE AUTHORITY OF THE TREASURER

Sales Tax Assessment Act 1992

Sales Tax Assessment Regulations

These regulations are made under section 131 of the Sales Tax Assessment Act 1992 (the Act) and will facilitate the Act's administration. These regulations are necessary because of the complete re-write of the sales tax law.

The new sales tax law will come into effect on 28 October 1992 but will not commence to impose tax on any assessable dealing until 1 January 1993. The old sales tax law will not apply to transactions, acts or operations that occur from 1 January 1993. However, the old law will continue in force because of its overlap with the new law in relation to leases, claims for refunds of tax, prosecutions and other dealings that occurred before the first taxing day of the new law.

The regulations relate principally to procedural or evidentiary matters regarding the temporary importation of goods, the export of goods from Australia by both Australians and foreign tourists travelling overseas, and activities excluded from manufacture.

The regulations also deal with matters such as the notification of an address for service and change of address, service of notices, and the manner of signing documents. The regulations also authorise the payment of expenses of persons required to attend and give evidence before the Commissioner or his officers and list Commonwealth-controlled authorities that are not exempt from paying sales tax.

An explanation of the regulations appears below.

Citation

Regulation 1 provides for these regulations to be cited as the Sales Tax Assessment Regulations.

Commencement

Regulation 2 provides that these regulations will commence on 1 January 1993.

Interpretation

Regulation 3 provides that unless a contrary intention appears:

       a reference to the Sales Tax Assessment Act 1992 will be facilitated by referring to it as the 'Act';

       a reference to 'approved' means that something has been approved by the Commissioner;

       a Collector for the purposes of the Customs Act 1901 will be referred to as the 'Collector'; and

       the Comptroller of Customs will be referred to as the 'Comptroller'.

Eligible Australian traveller

Regulation 4 provides that the term 'eligible Australian traveller', for the purposes of the definition in section 5 of the Act, will mean a person who intends to depart from Australia to travel to a foreign country. This term will describe the travellers to whom goods will be able to be sold at taxfree prices if the goods are to be exported on a flight or voyage on which the purchaser will be travelling. The seller will only be entitled to a credit (or refund) of the tax otherwise payable on the sale, if the sale is made in accordance with the rules of a 'sealed bag' system, under which proof of export of the goods will be required. The rules for this system will be set out in Table 2 of Schedule 1 to the Regulations.

Eligible foreign traveller

Regulation 5 provides that the term 'eligible foreign traveller', for the purposes of the definition in section 5 of the Act, will mean a person who:

(a)       is not an Australian citizen or the holder of a valid Australian passport;

(b)       intends to depart Australia and travel to a foreign country;

(c)       is the holder of a valid entry permit granted in relation to a visitor visa (including an entry visa) held by that person.

This term will describe a smaller category of travellers to whom goods will be able to be sold at tax-free prices if the goods are to be exported on a flight or voyage on which the purchaser will be travelling. These travellers will be bona fide foreign visitors holding valid Australian visitor visas or visitor entry visas, and will primarily be short term visitors holidaying in Australia.

The sale will be exempt from sales tax if it is made in accordance with the rules of an 'open bag' system, under which the eligible foreign traveller must sign a declaration of his or her intention to export the goods. (In some cases, the seller may have already borne tax on the goods. If the sale is made in accordance with the rules, then such a seller will be entitled to claim a credit (or refund) for the amount of the tax excluded from the traveller's purchase price.) The rules for this system will be set out in Table 1 of Schedule 1 to the Regulations.

Prescribed rules for export sales

Regulation 6 will provide that, for the purposes of the definition of the term 'prescribed rules for export sales' in section 5 of the Act, the rules set out in Schedule 1 will be prescribed. These rules will only apply where the goods being sold are to be taken by the traveller on a flight or voyage from Australia to a foreign country. The rules will be as follows:

Table 1       Rules for Export Sales to Eligible Foreign Travellers. (These rules will only apply if the traveller takes possession of the goods on the Australian side of the Customs barrier);

Table 2       Rules for Export Sales to Eligible Australian Travellers. (These rules will only apply if the traveller takes possession of the goods on the Australian side of the Customs barrier); and

Table 3       Rules for Export Sales to Eligible Foreign Travellers and Eligible Australian Travellers for collection beyond the Customs Barrier. (These rules will only apply if the traveller takes possession of the goods on the outward departure side of the Customs barrier).

Excluded manufactures

Regulation 7 prescribes certain combinations of parts or ingredients that will be excluded from the definition of manufacture in section 5 of the Act.

Paragraph (a) excludes a combination of parts or ingredients where the combination is one that would usually be undertaken by the end user of the goods. For example, the assembly of kit furniture or the mixing of concrete or mortar.

Annotations on returns

Subregulation 8(1) provides that the Commissioner may authorise an officer to make a mark on a return as the Commissioner approves.

Subregulation 8(2) provides that any mark made must be in a different coloured ink from that used in the return. This will allow any information provided by the maker of the return to be easily distinguished from a mark made by the Commissioner's officers.

Subregulation 8(3) creates an offence where a person intentionally marks a return contrary to the manner stipulated by this regulation. The offence carries a fine not exceeding $500.

Pre 14 May 1987 Commonwealth-controlled authorities

Regulation 9 provides that the bodies listed in Schedule 2 of these regulations are not exempt from paying sales tax. These bodies are specified Commonwealth-controlled authorities that were established before 14 May 1987, which was the date legislation was introduced to remove the sales tax exemption for such authorities. The authorities listed are those which were generally not entitled to sales tax exemptions.

Temporary importation of goods

Regulation 10 provides that certain goods may be brought into Australia on a temporary basis without the payment of sales tax. Paragraph 131(2)(a) of the Act allows regulations to be made for this purpose.

Subregulation 10(1) provides that, subject to subregulation 11(1), the relevant goods are the same goods that may be brought into Australia on a temporary basis free of customs duty. The sales tax concession is complementary to the customs concessions. Provision is also made to allow for a security or undertaking to be given to pay sales tax due on the goods should the conditions under which temporary importation is allowed be contravened.

Subregulation 10(2) covers a different range of goods that, subject to subregulation 11(2), may be brought into Australia on a temporary basis free of sales tax. The goods are those covered by subsection 162A(1) of the Customs Act 1901 and its supporting regulations. Provision is also made for a security or undertaking to be given if the conditions of temporary importation are contravened.

Subregulation 10(3) provides that sales tax is not payable on goods brought into Australia on a temporary basis where the goods are so specified by the Comptroller under Customs subregulation 125A(2). This subregulation is complementary to the Customs regulation.

Subregulation 10(4) provides that a security or undertaking may be enforced if the conditions of temporary importation are not complied with. The security or undertaking may be enforced whether the goods are of the kind covered by subsection 162(1) or subsection 162A(1) of the Customs Act.

Subregulation 10(5) provides that if a security has been paid, and no sales tax is payable on the goods, then the security may be returned to the person who provided it.

Disposal of goods brought into Australia on a temporary basis

Subregulation 11(1) provides that goods brought into Australia on a temporary basis under subsection 162(1) of the Customs Act must not be exported except in accordance with Customs subregulation 124(3). Goods can only be exported if notice of intention to export has been given, the goods have been examined by customs and an export entry has been made.

Subregulation 11(2) provides that goods brought into Australia on a temporary basis under subsection 162A(1) of the Customs Act and Customs regulation 125B cannot be lent, sold, hired out or otherwise disposed of without the consent of a Collector. A person may only deal with the goods in accordance with the conditions set out in the Customs regulation.

Subregulation 11(3) deals with goods that have been brought into Australia free of sales tax under Customs subregulation 125A(2). If those goods have been dealt with in a manner inconsistent with Customs subregulation 125B(2), then subregulation 10(3) will cease to apply to the goods.

Notification of address for service

Subregulation 12(1) requires a person who lodges a return or registers for sales tax purposes under the Act to notify the Commissioner in writing of an address in Australia for service of notices. There is a $500 penalty if a person fails to do this.

Subregulation 12(2) provides that where an address for service is notified to the Commissioner by the person furnishing a return or requesting registration under the Act, the address on the return is the person's address for service, subject to any changes to that address under Regulation 14.

Address for service - change of address

Regulation 13 provides that a taxpayer who has had any assessable dealing that involves a sales tax liability must notify the Commissioner if they have changed their address for service within one month of the change.

There is a penalty of $500 if the person fails to do this.

Address for service

Regulation 14 provides that a person's address for service of notices is:

(a)       the last address notified by that person to the Commissioner in writing; or

(b)       the person's last known place of business or residence in Australia if an address has not been notified; or

(c)       any other address that the Commissioner reasonably believes to be the person's address.

Official signatures

Subregulation 15(1) provides that a document under the Act purporting to be signed by the authority of the Commissioner will be as effective as if the document has been personally signed by the Commissioner.

Subregulation 15(2) makes it clear that a certificate, notice or other document required by the Act to be signed by the Commissioner, Second Commissioner or a Deputy Commissioner will be treated as being so signed if it bears the written, printed, or stamped name, or a facsimile of the signature of a person who is, or was at the relevant time, the Commissioner, Second Commissioner or a Deputy Commissioner.

Service of notices etc.

Regulation 16 provides that the Commissioner may serve any notice or other document on a person, by post, at the address in Australia that has been given to the Commissioner for service of documents.

Expenses allowed to persons required to attend before the Commissioner

Regulation 17 provides that a person who is required to attend and give evidence before the Commissioner or an authorised officer under subsection 108(1) will be allowed to claim expenses. The scale of expenses is set out in Schedule 3 of these regulations. Expenses will not be paid to a person attending in respect of her or his own assessment or the assessment of a person whom they are representing.

Schedule 1 - Table 1

Rules for Export Sales to Eligible Foreign Travellers

'Open bag' system: A sale of goods will be made in accordance with the Rules for Export Sales to Eligible Foreign Travellers (as set out in Table 1) if the traveller takes possession of the goods on the Australian side of the Customs barrier; the goods are to accompany the traveller on a flight or voyage from Australia to a foreign country; and the 5 foreign traveller ('FT') Rules are satisfied as follows:

FT Rule 1:       The seller sights certain travel documents;

FT Rule 2:       The purchaser signs an FT declaration;

FT Rule 3:       The seller makes an invoice in the approved form;

FT Rule 4:       The seller retains copies of certain documents; and

FT Rule 5:       The purchaser does not take possession of the goods earlier than 30 days before the specified departure date.

Schedule 1 - Table 2

Rules for Export Sales to Eligible Australian Travellers.

'Sealed bag' system: A sale of goods will be made in accordance with the Rules for Export Sales to Eligible Australian Travellers (as set out in Table 2) if the traveller takes possession of the goods on the Australian side of the Customs barrier; the goods are to accompany the traveller on a flight or voyage from Australia to a foreign country; and the 11 Australian traveller ('AT') Rules are satisfied as follows:

AT Rule 1:       The seller sights certain travel documents;

AT Rule 2:       The purchaser signs an AT declaration;

AT Rule 3:       The seller makes an invoice in the approved form;

AT Rule 4:       The seller retains copies of certain documents;

AT Rule 5:       The purchaser does not take possession of the goods earlier than 30 days before the specified departure date;

AT Rule 6:       The purchaser only takes possession of the goods in a sealed package, with an invoice copy attached to the outside of the package;

AT Rule 7A:       The invoice copy attached to the outside of the package is retrieved at any point of surrender of the goods before the Customs barrier; or

AT Rule 7B:       The invoice copy attached to the outside of the package is retrieved when beyond the Customs barrier;

AT Rule 8:       The sealed package is examined for any tampering;

AT Rule 9:       The Commissioner is notified if the package has been tampered with;

AT Rule 10:       The retrieved invoices have been validated as required; and

AT Rule 11:       The retrieved invoices have been reconciled against the seller's copy of the invoice.

Schedule 1 - Table 3

Rules for Export Sales to Eligible Foreign Travellers and Eligible Australian Travellers

'Beyond the barrier' system: A sale of goods will be made in accordance with the Rules for Export Sales to Eligible Foreign Travellers and Eligible Australian Travellers (as set out in Table 3) if the traveller takes possession of the goods on the outward departure side of the Customs barrier; the goods are to accompany the traveller on a flight or voyage from Australia to a foreign country; and the 4 Customs Barrier ('CB') Rules are satisfied as follows:

CB Rule 1:       The seller sights certain travel documents;

CB Rule 2:       The purchaser signs a CB declaration (if required);

CB Rule 3:       The seller makes an invoice in the approved form; and

CB Rule 4:       The seller retains copies of certain documents (if required).

Schedule 2

Non-exempt authorities established before 14 May 1987

This is a list of Commonwealth-controlled authorities that are not exempt from paying sales tax as per Regulation 9.

Schedule 3

Scale of Expenses

This schedule sets out the scale of expenses, as provided in Regulation 17, for persons who are required to attend and give evidence before the Commissioner. The expenses are generally those specified in the High Court Rules as in force from time to time.

The Schedule also provides for the payment of reasonable expenses of travel of the witness, and if the witness is required to be absent overnight, reasonable costs for meals and accommodation.


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