The Australian Government intends to amend the vouchers provisions contained in Division100 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) to clarify that prepaid phone products are eligible 'vouchers' for the purpose of that Division, the Minister for Revenue and Assistant Treasurer, Mal Brough, announced today.
Since the introduction of the GST, telecommunications companies have been treating prepaid phone products as eligible 'vouchers'. However, the Australian Taxation Office has ruled that, from that time, not all prepaid phone products qualify for Division100 treatment. To ensure consistency of treatment of prepaid phone products and to reduce compliance costs associated with revising Business Activity Statements, the amendment will apply retrospectively from 1 July 2000.
There has been some uncertainty amongst taxpayers about whether GST needs to be remitted to the Australian Taxation Office on the basis of the face value of a voucher (the stated monetary value on the voucher) or on the basis of the amount of money (or consideration) that is actually received.
To remove this uncertainty, the Government will also amend the law to clarify that GST should be remitted on the face value at the time a voucher is redeemed (taking into account any additional consideration or refunds provided). Any subsequent increasing adjustment in relation to an unredeemed part of a voucher will also be based on this amount. This amendment will apply from 11 May 2005.
This amendment is consistent with the intended policy (as stated in the explanatory memorandum to the initial legislation, A New Tax System (Indirect Tax and Consequential Amendments) Bill (No.2) 1999), which is that GST be remitted on the face value. This ensures that where vouchers are sold at a discount any value added along a distribution chain is subject to GST.
Consistent with the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, the Government is seeking the approval of the states and territories to these measures.