Commonwealth Numbered Regulations - Explanatory Statements

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A NEW TAX SYSTEM (GOODS AND SERVICES TAX) AMENDMENT REGULATIONS 2000 (NO. 6) 2000 NO. 363

EXPLANATORY STATEMENT

STATUTORY RULES 2000 No. 363

Issued by Authority of the Assistant Treasurer

Subject -        A New Tax System (Goods and Services Tax) Act 1999

A New Tax System (Goods and Services Tax) Amendment Regulations 2000 (No. 6)

The Governor General may make regulations under section 177-15 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) for the purposes of that Act.

These Regulations amended the A New Tax System (Goods and Services Tax) Regulations 1999 to ensure that an interest in a time-sharing scheme is treated as a financial supply. Section 40-5 of the GST Act permits the regulations to specify those supplies that are financial supplies.

A typical time-sharing scheme involves the acquisition of an interest in a scheme by way of contribution of monies to a scheme operator, who in turn acquires property, the use of which is shared between the scheme participants. A person who holds an interest in a time-sharing scheme is able to have access to the scheme property for a specified time period.

Pursuant to item 10 of Subregulation 40-5.09(3) of the Principal Regulations, the acquisition, provision or disposal of an interest in a security was treated as an input taxed financial supply. However, item 10(b) of Subregulation 40-5.09(3) excluded a time-sharing scheme from coming within the meaning of securities. This was because an interest under a time-sharing scheme is more akin to an interest in real property than to a security. The exclusion was inserted in the Regulations by amendment on 26 May 2000. As a result, the supply of an interest in a timesharing scheme was a taxable supply, and the supplier was entitled to claim input tax credits in respect of acquisitions of things that relate to making the supply.

The government accepted representations that an interest in a time-sharing scheme should be treated as a security for GST purposes, as it is treated as a security under the Corporations Law. The amendment removed the exclusion, and allows the acquisition, provision or, disposal of an interest in a time-sharing scheme to be treated as a security for GST purposes. [Schedule 1, item 1, new Subregulation 40-5.09(3), item 10]

As a result, the acquisition, provision or disposal of an interest in a time-sharing scheme is an input taxed financial supply. This means that there is no GST on the supply and the supplier is not entitled to input tax credits on acquisitions relating to the making of the supply.

The Regulations commenced on date of notification.


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