Review of the application of GST to cross-border transactions

The Board has completed its review of the application of GST to cross-border transactions and provided its report to the Assistant Treasurer. In preparing its report the Board took into account the various submissions to the review and discussions with stakeholders. In line with past practice, the Board's report is expected to be available at the time the Government releases its response to the report.

Background

On 12 May 2009, the Assistant Treasurer announced that he had asked the Board of Taxation to undertake a review of the application of GST to cross‑border transactions, in particular the extent of non‑resident participation.

During the Board's previous review of the legal framework for the administration of the GST, a large number of issues were raised in public consultations and submissions concerning non‑residents and cross‑border transactions. As part of that review, the Board recommended that the Government may wish to consider a review of the application of the GST to cross-border transactions with a view to simplifying and reducing the number of non‑residents in the system.

Terms of Reference

The Board has been asked to consult widely with relevant stakeholders and report to the Government on improvements to the design of the GST system necessary to ensure that cross‑border transactions are treated in an efficient and effective manner. A particular focus will be those design features underpinning the involvement of non‑residents in the Australian GST system with a view to simplifying the design.

The review should include, but not be limited to, the consideration of;

• the impact of the current cross‑border provisions on the international competitiveness of Australian enterprises;
• the extent to which non‑residents should be drawn into the operation of the GST;
• the role of resident agents acting for non‑residents and whether there is scope to broaden it; and
• ways to simplify and reduce compliance and administrative costs associated with cross‑border transactions.

The Board should have regard to the design features of the GST as a multi‑stage value added tax and should also ensure that any possible changes do not undermine the integrity of the GST in aiming to tax final consumption in Australia. In considering any changes, the Board should ensure that its recommendations have regard to the likely impact on revenue.

After considering the views of all stakeholders the Board is to provide a final report to the Government by the end of February 2010.

On 29 July 2009, the Chairman of the Board of Taxation announced the release of its discussion paper on the review of the application of GST to cross-border transactions.  In developing the discussion paper the Board consulted with members of its expert panel. A copy of the discussion paper is available for download.
The discussion paper:

• provided some background to how and the framework under which GST is applied to cross‑border transactions;
• examined issues relating to the application of GST to cross-border transactions; and
• explored various options to improve the application of GST to cross-border transactions.

The Board requested written submissions on the review of the application of GST to cross‑border transactions by 4 September 2009. All submissions received were acknowledged. Copies of public submissions made to the Board are available from the GST Cross-Border Submissions page.

The Board also held targeted consultation meetings with selected stakeholders who have made submissions. The purpose of these meetings was to clarify aspects of these submissions and to explore possible responses to issues raised in these submissions.

Further information on this review can be obtained from Megan Butcher (02 6263 4363) at the Board of Taxation Secretariat.