Foreign currency conversion – draft legislative determinations
The following draft legislative determinations dealing with foreign currency conversion for goods and services tax (GST) purposes were issued for comment during April:
- FOREX 2018/D1: Draft Goods and Services Tax: Foreign Currency Conversion Determination 2018. This draft determination sets out the method to convert amounts of consideration that are expressed in foreign currency into Australian currency for the purposes of working out the value of a taxable supply.
- LVG 2018/D1: Draft Goods and Services Tax: Foreign Currency (Customs Value of Low Value Goods) Determination 2018. This draft determination provides a method for converting an amount expressed in foreign currency into Australian currency when working out the customs value of goods to determine if there is a supply of low value goods.
Comments are due by 9 May 2018. Both determinations will apply from 1 July 2018 when finalised.
GST governance and record keeping for financial suppliers
The Australian Taxation Office (ATO) has developed draft web guidance on GST governance and record keeping for financial suppliers in relation to the priority issues identified in the ATO’s GST Financial Services and Insurance (FSI) strategy. This includes determining the extent of creditable purpose, reduced credit acquisitions, the reverse charge for recipients of cross-border supplies, rights for use offshore and significant or unusual transactions. Comments are due by 18 May 2018.
Report on GST Revenue Sharing Relativities
The Commonwealth Grants Commission has released its report on GST Revenue Sharing Relativities. The report contains the Commission’s response to the terms of reference for the 2018 update received from the Treasurer. The Commission had been asked to advise on how GST revenue should be distributed among the States in 2018-19.
In addition, the Treasurer has announced that States and Territories are projected to receive AUD 5 billion in additional GST funding over four years (detailed in the report), from new measures such as improving the integrity of GST on property transactions and applying the GST to digital products and services and to low value goods imported to Australia.
Tariff cuts under Japan -Australia trade agreement
The fifth round of tariff cuts under the Japan- Australia Economic Partnership Agreement (JAEPA) came into effect on 1 April 2018. Refer to the Government’s media release for further information.
Senate inquiry into TPP 11
The Senate has referred the Proposed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP 11) to the Foreign Affairs, Defence and Trade References Committee for inquiry and report by 18 September 2018.
Trade and Customs regulations
Regulations have been made to amend the Customs Regulation 2015, the Customs (Prohibited Exports) Regulations 1958, the Customs (Prohibited Imports) Regulations 1956 and the Commerce (Trade Descriptions) Regulation 2016 (CTD) to improve and strengthen policies, as well as administrative practice. For example, Schedule 1 of the Regulations amends the CTD Regulation to insert an offence for contraventions of the labelling requirements for certain goods at the border with a corresponding penalty (operating as a maximum) of 50 penalty units (AUD 10,500).