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Tax Alerts: Indirect Taxes

Tackling the VAT Gap - 9 June 2017

VAT is a major source of tax revenues within the EU, raising almost €1 trillion, or 7 per cent of EU GDP, a year. The current system of VAT collection, though, is struggling to keep up with the challenges of today’s international, digital and mobile economy. The VAT Gap in the EU 27 – the difference between expected VAT revenues and the amount actually collected by tax authorities – is nearly €160 billion a year, of which cross-border VAT fraud in goods accounts for €50 billion. 

Australian Trusted Trader Programme - funding for future years secured and first agreements inked - 2 May 2016

The Australian Border Force continue to refine the Australian Trusted Trader Programme structure in anticipation of the 1 July 2016 implementation date.

Australian Trusted Trader Programme & Known Consignor – between the lines - 1 March 2016

Time is running out to ensure your business is Australian Trusted Trader ready before the full launch of the programme on 1 July 2016. Our team share new insights into the processes and benefits of the programme.

2015

Now is the time to become an Australian Trusted Trader - 1 December 2015

As the Australian Trusted Trader programme enters its second phase, now is the time for Australian importers and exporters to familiarise themselves with the programme and discover the benefits it offers.

GST & imported digital services: learnings from offshore - 1 October 2015

As Australia moves to introduce measures to apply GST to the supply of digital products and services from overseas suppliers to resident consumers, what can we learn from the European Union experience?

GST Treatment of Cross-Border Transactions: changes to B2C and B2B supplies – 9 October 2015

Treasury has released a second Exposure Draft legislation on the Government's integrity measure to extend the GST to imported digital products and services from 1 July 2017. The Exposure Draft also contains measures relating to GST cross-border transactions between businesses and the ‘connected with Australia’ rules.

ATO ruling – development lease arrangements with government agencies – 5 June 2015

On 3 June 2015, the Australian Taxation Office (ATO) issued Goods and Services Tax Ruling GSTR 2015/2 which sets out the Commissioner of Taxation’s views on the GST treatment of particular transactions arising in the context of development lease arrangements entered into between government agencies and private developers.

Claiming GST credits: sticking to the facts - 1 October

We examine the Full Federal Court decision in Rio Tinto v Commissioner of Taxation, which addresses the GST concept of 'creditable purpose'. 

ATO ruling - GST refunds – 25 March 2015

On 25 March 2015, the Australian Tax Office (ATO) issued GST Ruling GSTR 2015/1 which sets out the Commissioner of Taxation's (Commissioner) views on the meaning of the terms 'passed on' and 'reimburse' for the purposes of Division 142 of the GST Act (which deals with refunds of 'excess GST').

The object of Division 142 is to ensure that 'excess GST' is not refunded if this would give an entity a windfall gain. Excess GST is an amount of GST included in the net amount declared on a Business Activity Statement (BAS) that exceeds the amount which should have been included in the relevant net amount.

GST Treatment of Cross-Border Transactions: Law changes tabled in Parliament – 12 February 2015

The Tax and Superannuation Laws Amendment Bill 2016 was introduced into Parliament this week and contains perhaps the most significant changes to the GST since its introduction, including:

  • Extending the GST to digital products and services supplied by non-residents to Australian consumers from 1 July 2017. 
  • Long awaited measures to reduce the compliance burden for non-residents transacting with Australian GST registered entities. 

Given the measures are generally supported by both sides of Government, we anticipate that the Bill will be passed in its current form. 

In this Tax Alert we examine these changes and how they may affect you.

Recoverability of GST credits – 20 February 2015

Federal Court decision for the Commissioner in the Rio Tinto Services case

In a test case before the Federal Court, Rio Tinto argued that it was entitled to input tax credits for acquisitions made in providing and maintaining residential accommodation for its workforce in remote locations. Justice Davies has confirmed that where a material or sufficient relationship or connection exists between an acquisition and the making of an input taxed supply of residential accommodation, a taxpayer is not entitled to claim input tax credits. This is regardless of the purpose for which the taxpayer made the input taxed supply.

The decision has been long awaited by the resource sector, particularly those taxpayers who incur substantial costs in providing accommodation to its workforce in remote parts of Australia. Following the concessions provided by the Commissioner in relation to camp style accommodation in Goods and Services Tax Ruling GSTR 2012/6, this decision effectively draws the line on input tax credit recovery for the sector between short term, worker only accommodation (taxable) and town based, family style accommodation (input taxed).

2014

Anti-dumping reform to ensure Australian industry can compete in the international trade context – 17 December 2014

As you may be aware, the Parliamentary Secretary to the Minister for Industry, the Hon Bob Baldwin MP and the Minister for Industry, the Hon Ian Macfarlane MP, have announced reforms to Australia's anti-dumping system aimed at ensuring Australian manufacturers and producers are able to compete on a level playing field in international trade, while complying with our international trade rules and obligations.

The purpose of the reforms is to ensure that while Australia becomes increasingly open and supportive of free trade, it is important to ensure that Australian industry is not left vulnerable to dumping by foreign exporters. Significantly, all of the reforms comply with Australia's World Trade Organisation (WTO) and other related international trade obligations.

In particular, the reforms include:

  • the ability for the Anti-Dumping Commissioner to impose provisional measures at day 60 of an investigation, wherever possible
  • more stringent deadlines for the lodgement of submissions (reduced from 40 days to 37 days) together with a rigorous approach to enforcing deadlines with submissions
  • broadening the scope of circumstances in which an exporter can be deemed uncooperative, to encourage greater cooperation from exporters in order to avoid heavier dumping duties being imposed against them
  • raising the legal threshold for reviews of anti-dumping decisions, including imposing a scaled fee for seeking appeal
  • implementing a range of new and expanded information and support services to provide improved assistance to Australian businesses involved and/or interested in the anti-dumping system, including establishing a market research function to enhance the Anti-Dumping Commission's economic analysis of trends and trading behaviours
  • introducing regulation to address emerging behaviour relating to foreign exporters slightly modifying their goods in order to circumvent anti-dumping duties currently in place, and
  • implementing a number of technical legislative changes to modernise Australia's anti-dumping laws and reduce unnecessary red tape to improve the certainty of Australia's anti-dumping system.

The Government will be introducing legislation to give effect to the reforms throughout 2015.

PwC has significant experience in providing anti-dumping and countervailing services to our clients, as well as broad based commercial advice on all matters relating to international trade. Being a multi-disciplinary member of network of firms in 157 countries , PwC is uniquely placed to provide the skill sets and jurisdictional reach required to assist clients and the Anti-Dumping Commission with anti-dumping and countervailing investigations.

Should you wish to know more about Australia's anti-dumping reform, please contact your usual PwC contact or the contacts to the right of this page.

GST adjustments and leases of real property – 4 December 2014

Yesterday the High Court unanimously decided to allow the Commissioner’s appeal in the MBI Properties case. This decision provides certainty as to whether the new owner of a reversionary interest in real property is required to pay GST on the rent received for the lease of the property, and is potentially subject to an increasing GST adjustment under Division 135 of the GST Act if they acquired the property as a GST-free going concern. Earlier decisions in the Federal Court had concluded that in the context of a lease, there was only one ‘supply’ for GST purposes being the entry into or the grant of the lease. In overturning these earlier decisions, the High Court has confirmed a supply is made by the new owner of the reversionary interest.

Negotiations conclude on the China Free Trade Agreement – 1 December 2014

On 17 November 2014, the Minister for Trade and Investment, Andrew Robb, and Chinese Commerce Minister, Gao Hucheng, signed a Declaration of Intent to formalise the conclusion of the China-Australia Free Trade Agreement (ChAFTA).

China is Australia's largest export market for both goods and services and accounts for approximately a third of total exports. The ChAFTA aims to deliver significant benefits to Australia's agricultural producers, resource exporters and service providers.

ATO draft ruling – new GST refund rules – 25 September 2014

On 24 September 2014, the Australian Tax Office (ATO) issued Draft GST Ruling GSTR 2014/D4 which sets out the Commissioner's preliminary views on the meaning of the terms ‘passed on’ and ‘reimburse’ for the purposes of Division 142 of the GST Act.

Background

The object of Division 142 is to ensure that ‘excess GST’ is not refunded if this would give an entity a windfall gain. Excess GST is an amount of GST included in the net amount declared on a Business Activity Statement (BAS) that exceeds the amount which should have been included in the relevant net amount.

Key points

An amount of excess GST will only be refundable if:

  • It has not been ‘passed on’ to the recipient, or
  • It has been passed on to the recipient, and the recipient has been ‘reimbursed’.

Simplifying Australia's biosecurity and quarantine laws: the Biosecurity Bill 2014

The Minister for Agriculture, Barnaby Joyce, has announced the Government's plans to progress the Biosecurity Bill 2014, which will replace the century old Quarantine Act 1908. Biosecurity risks have changed significantly since the Quarantine Act was drafted and include activities conducted onshore, offshore and at the border, and which can impact human, plant and animal health, the economy and the environment.

The legislation has been developed to simplify and clarify biosecurity regulatory requirements, with the objective of intervening only where there is a biosecurity risk to be managed and enhancing Australia’s capacity to manage biosecurity risks into the future. The intended result is the reduction of unnecessary regulatory and administrative burdens on users of the system.

The Biosecurity Bill 2014 is based on the initial Biosecurity Bill which was introduced in 2012, but lapsed due to the proroguing of Parliament in 2013. Improvements to proposed legislation include:

  • a reduction of more than $6.9 million a year in business compliance costs through streamlining the legislation
  • allowing the general compliance history of a business to be considered when deciding whether to allow the importation of a good or undertake biosecurity activities (whereas the Quarantine Act only allows for assessment of the risks associated with the goods themselves), and
  • new powers to allow the Commonwealth to respond to biosecurity risks within Australia.

Throughout the process of legislative change, PwC has engaged with the Department of Agriculture at a senior level to understand the likely impact of the biosecurity reform. The Biosecurity Bill 2014 also includes the ability for an importer to receive formal accreditation to manage and maintain quarantine related supply chains under the new concept of ‘Approved Arrangements’.

The potential benefits for Australian importers and exporters arising from the move to a risk-based approach to biosecurity include reduced cost of capital, lower quarantine fees, removal of supply chain delays and brand enhancement through being recognised as secure and safe international trader.

The Department of Agriculture is continuing to seek consultation from interested parties prior to the Bill being introduced.

To have a more detailed discussion about what the above means for you, please contact your usual PwC advisor or any of the contacts to the right of this page.

ATO considers a moratorium on GST business systems reviews – 1 August 2014

The Integrity of Business Systems (IBS) has long been identified by the ATO as the major risk to Australia’s GST revenues. The ATO announced in its roadshow for the 2014/15 GST Annual Compliance Programme, that IBS risk is still at the top of its GST compliance agenda.

Parliament goes on a break – 21 July 2014

The Winter sittings of Federal Parliament wrapped up on 18 July 2014.

with the handing down of the Government’s first Federal Budget on 14 May, the Winter sittings of Parliament concluded with the first gatherings of the new Senate following last year’s Federal Election. As the past two weeks will attest, the composition of the new Senate is likely to throw a number of roadblocks in the Government’s path, although the Government has been successful in delivering on one of its signature tax commitments in this session – the repeal of the carbon tax.

Here, we provide a wrap-up of the current status of key tax measures that were before Parliament during the Winter sittings or are otherwise in the pipeline. Parliament resumes for the Spring sittings on 26 August 2014.

Fuel taxes and the Federal Budget – 16 May 2014

The Federal Budget included a number of significant changes in respect to fuel taxation. The following Tax Alert provides a summary of these explains how they will affect you.

Using data analytics to find missing GST – 1 May

Applying data analytics to understand your business better is all the rage. But, rarely do companies think about using these tools for a simple and straightforward review of their GST compliance.

Recent developments in Foreign Investment Review Board approvals: a focus on Advanced Pricing Agreements – 1 May 2014

Some recent Foreign Investment Review Board (FIRB) approvals have required an undertaking that negotiations on an Advanced Pricing Agreement (APA) will be entered into with the Australian Taxation Office (ATO). This development has the potential to create interesting interactions between the FIRB approval process and the ATO’s APA program.

Negotiations conclude on the Japan Australia Economic Partnership Agreement

On 7 April 2014, the Prime Minister Tony Abbott announced the conclusion of negotiations on the Japan Australia Economic Partnership Agreement (JAEPA). Japan is Australia’s second-largest export market and our second-largest trading partner.

The JAEPA aims to deliver significant benefits to Australian’s agricultural producers, resource exporters, service providers and consumer. Read our International Trade & Excise Alert to find out more about this important development.

  • Agricultural tariffs of up to 219 percent will be eliminated or significantly reduced on many Australian agricultural exports. Exporters of beef, sugar, horticulture, wine and seafood will benefit from preferential access to the Japanese market and tariffs will be bound at zero for wool, cotton, lamb and beer.
  • Energy and mineral products account for almost 89 percent of Japan’s merchandise imports from Australia. Under JAEPA, all tariffs on energy and mineral products will be eliminated within ten years, most on entry into force of the agreement.
  • Japan currently applies tariffs of up to 30 percent on some manufactured products. Under JAEPA, tariffs on $243 million worth of Australian manufactured exports to Japan will be eliminated immediately on entry into force of the agreement.
  • Australian financial service providers will benefit from commitments made by Japan for the first time, guaranteeing cross-border access for Australian funds managers providing investment advice and portfolio management services.
  • JAEPA guarantees Australian suppliers access to the Japanese government procurement market and contains commitments that will ensure transparency and facilitate participation in procurement processes. Australian and Japanese procuring entities have committed to provide national treatment for the goods, services and suppliers of the other Party for procurements above agreed value thresholds.

In the interim, to have a more detailed discussion about the JAEPA and what it could mean for your business, please contact your usual PwC contact.

Investigation into the alleged Dumping of Q&T Steel Plate exported to Australia - 17 February 2014

The Anti-Dumping Commission (the Commission) recently initiated an investigation into the alleged dumping of Quenched and Tempered steel plate (Q&T steel plate) ("the goods") exported to Australia from Finland, Japan and Sweden.

The investigation follows an application lodged by Bisalloy Steels Ltd alleging that Q&T steel plate has been exported to Australia from Finland, Japan and Sweden at a price less than what would be considered normal value, and that this dumping has materially injured the Australian industry.

The finding by the Commission that dumped exports of Q&T steel plate has caused material injury to the Australian industry may result in the Minister for Home Affairs imposing dumping duties on future imports of Q&T steel plate. A preliminary assessment performed by the Commission indicates that such dumping duties may be as high as 14% of the normal value of the goods. The Commission has invited interested parties, being exporters, importers and Australian producers, to lodge submissions concerning the publication of a dumping duty notice by no later than 17 February 2014.

Updates

Contact us

Peter Konidaris

Managing Partner Melbourne, PwC Australia

Tel: +61 (3) 8603 1168

Jeff Pfaff

Partner, Payment Times Reporting Lead - Financial Advisory, PwC Australia

Tel: +61 401 222 696

Michelle Tremain

Partner, PwC Australia

Tel: +61 8 9238 3403

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