The Government today released the details of draft legislation to deal with the GST treatment of long-term non-reviewable contracts, inviting interested parties to comment on the proposed measures.
Long-term non reviewable contracts have transitional GST-free treatment which ends on 30 June 2005. On 21 November 2003, the Government announced its intention to revise the way GST is applied to long-term contracts that have not had a review opportunity. Without legislative changes, suppliers of these contracts would incur a GST liability, without being able to recover the cost of GST from recipients.
"The Department of Treasury consulted extensively with industry to come up with a simple solution that was fair to both recipients and suppliers. Draft legislative measures have been developed from that consultation process," Minister for Revenue and Assistant Treasurer, Mal Brough, said today.
"The legislative measures allow suppliers and recipients to negotiate one of three possible outcomes. First, both parties might agree to a revised contract price that includes GST.
"Secondly, the supplier might choose to accept the GST liability on the existing contract price without seeking an adjustment.
"And finally, the GST liability could shift to the recipient – either because they elect to pay the GST liability, or because they have failed to accept a price adjustment."
"The Government is keen to hear the views of recipients of these contracts, including those who may not be registered for GST or who are operating a small business."
The draft measures provide special rules to deal with the latter situation. The draft legislation is being released on the Treasury website at www.treasury.gov.au, and comments are welcome until 12 November 2004.
Media Contact: Carlie Hogan - 6277 7360