Commonwealth Treasury has proposed changes to the A New Tax
System (Goods and Services Tax) Regulations 1999 (GST Regulations)
which would fundamentally alter the tax treatment of routine
commercial transactions as well as providing clarification on some
contentious areas of GST and financial supplies.
The proposed change to the ability of entities to claim reduced
input tax credits (RITCs) for the acquisition of trustee services
will not only change the "net cost" of acquiring those
services but will also affect disclosure documents issued to
investors and the economics of finely tuned financial products.
Instead of a 75% RITC, certain trustee services will now only be
eligible for a 55% RITC – introducing further complexity
and compliance costs.
On the other hand, the proposed changes to the treatment of hire
purchases will finally resolve one of the nagging anomalies within
the GST law by eradicating the unnecessary distinction between the
hire purchase of goods with a disclosed credit charge (which is
partially input taxed) and the hire purchase of goods without a
disclosed credit charge (which would be wholly taxable). The
proposed amendments will treat all supplies of goods by way of hire
purchase as taxable supplies, removing the complexity and
compliance costs associated with the partial denial of input tax
credits under the current rules.
Other minor changes seek to resolve uncertainty regarding the
GST treatment of:
guarantees and indemnities;
lenders mortgage reinsurance; and
The proposed amendments are intended to take effect from 1 July
2012. Treasury is engaging in a consultation process regarding the
detail of the proposals and is accepting submissions until 24
The proposed amendments to the treatment of hire purchase
arrangements should be uncontroversial as they provide much needed
clarity and simplification. However, the changes to the RITC regime
for trustee services are likely to be complex in their
implementation, will increase costs and are likely to be met with
Read on for further detail regarding the proposed
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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Exemptions or concessions on stamp duty could apply when contemplating the purchase or transfer of NSW real estate.
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