Simplifying the Tax System: Self Assessment of Indirect Taxes
As part of the Gillard Government's continuing focus on simplifying the tax system, Assistant Treasurer Bill Shorten today announced amendments to Australia's tax laws to allow taxpayers to self assess indirect taxes such as the GST and wine equalisation tax (WET).
The Government is consulting on draft legislation that introduces a self assessment system for GST and the other indirect taxes, and establishes a generic assessment framework that could be applied broadly across the tax system in the future.
"The amendments will reduce the complexity of the tax law associated with having different administration regimes for indirect taxes and income tax," said the Assistant Treasurer.
"Bringing indirect taxes into a self assessment regime will decrease the need for advisors and administrators to have specialist knowledge of unique income tax or GST administration provisions. This could, in turn, result in a reduction in compliance and administrative costs in the longer term."
The draft measures implement the decision, announced in the 2009-10 Budget, that the Government would harmonise the existing self actuating system for GST, WET, luxury car tax (LCT) and fuel tax credits with the income tax system of self assessment. The greater standardisation between the administration regimes of the two taxes will result in lower compliance costs for taxpayers, with common rules applying across the different taxes.
These changes implement recommendations made in the Board of Taxation's review of the legal framework for the administration of the GST, released in December 2008.
The key features of the amendments include:
- Introducing greater harmonisation between the current self actuating system for GST, WET, LCT and fuel tax credits and the income tax system of self assessment
- Refreshing the four year period of review for indirect taxes in cases where the amount of tax payable or refund entitlement has been amended in respect of the particular that led to the amendment
- Clarifying the GST law to confirm that LCT and WET are part of the net amount calculated under the GST Act
- Setting up a generic assessment framework for indirect taxes in the Taxation Administration Act 1953 that could be applied more broadly across the tax system in the future.
The changes are to have effect from 1 July 2011.
The exposure draft legislation is available on the Treasury website www.treasury.gov.au. Consultation closes on Tuesday 15 February 2011.
18 January 2011