GST reforms remain subject to refinement

The GST came into existence in 2000 and the CBFCA started seeking change about 18 months later in 2002.
Seven years later, the Federal Government said at Budget time that changes to GST administration, following a Board of Taxation review that included duty items, would apply from July 1 next year.
“I have asked the board to undertake a review of the application of the GST to cross-border transactions and consult widely with stakeholders,” assistant treasurer Chris Bowen said.
Initially, the CBFCA had tackled the Australian Taxation Office on the determination of the value of taxable importation in relation to overseas freight and insurance.
Three years ago, it added the issue of GST on delivery duty paid (DDP) and delivery duty unpaid (DDU) shipments.
The review will now consider both.
“The crystalisation of both these issues is now heading towards an administrative solution of a legislative solution,” chairman Steve Morris said.
The CBFCA and the ATO had met as late as last week to work on a way forward.
“Dealing with government on any form is a long, tortuous process,” Mr Morris said.
“And to seek changes from the tax office and Treasury are even more long and tortuous.”
He hailed the efforts over the time of a number of CBFCA representatives, most notably a previous CBFCA chairman in Bob Fraser, who was able to bring the likes of the Conference of Asia Pacific Express Carriers and the Australian Federation of International Forwarders into the negotiation process.
The CBFCA had taken up the cudgels because of the broad impact of the issue, with Customs compliance ramifications due to its work for Treasury at the border.
“Customs will issue non-compliant activity notice for [as little as] $20 or $22 you have not paid on GST” if calculations on the overseas component of international freight are found to be in error, Mr Morris said.
He said the process of getting change had received a great boost when Michael Carmody went from being commissioner of taxation to chief executive of Customs.
Despite the government’s move, the CBFCA has sounded a note of caution.
“By no means does it constitute a final determination of the issue and it may suggest that the current levels of exposure remain in place,” it said.
The CBFCA made the following points:
• There will be a broader review of GST payable in cross-border transactions;
• This is only a discussion paper for consideration by relevant parties and government;
• The proposal to change the law implies that the current version does create problems for those providing transport services to non-resident entities who are sending goods by DDP and DDU;
• The discussion paper does not address the retrospective application (if there was to be any) on the change in the law;
• The CBFCA will be continuing to take a lead on the issue and making a submission in conjunction with its industry partners and external consultants and this action had already commenced to address these issues with Treasury and the ATO.
The CBFCA said there were three main changes to the GST law proposed in the discussion paper.
First was a shift of GST paid on the domestic transport of imported (DDU and DDP goods) from the suppliers of the transport service to the goods themselves through inclusion of the value of the domestic transport in the VoTI calculation.
This would mean that the GST would fall on the importer rather than, initially, the domestic supplier (and consequently any non-resident entity).
Second was the changing the “place of export” of non-postal containerised goods for the primary transport provider from the “place of containerisation” to the “place from which they are collected.” This would be consistent with the treatment of postal export supplies.
Third was making taxable the transport of supplies made by resident transport subcontractors employed in the domestic leg of an export chain. This would remove the need for local subcontractors to know the ultimate destination of goods so as to apply different GST treatment if the goods were destined for overseas.