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Goods and Services Tax

Date

2.2 Tax expenditures (continued)

H. Goods and Services Tax

The goods and services tax (GST) benchmark comprises:

  • the value of the final supply of all goods and services privately consumed and investment in residential housing in Australia as the tax base;
  • the entity making a supply (or receiving a supply in the case of reverse charges) as the tax unit;
  • the existing GST rate as the tax rate; and
  • the financial year as the taxation period.
H1 GST — financial Supplies; financial acquisitions threshold
General public services — Financial and fiscal affairs ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Concessional rate 2012 TES code: H1
Estimate Reliability: Not Applicable * Category 3+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Generally, financial supplies are input taxed, meaning that an entity is not entitled to input tax credits for acquisitions relating to the financial supplies made by the entity. However, an entity can be entitled to input tax credits for its financial acquisitions if it does not exceed the financial acquisitions threshold. The entitlement to input tax credits for financial acquisitions in these circumstances is regarded as a positive tax expenditure.

An entity does not exceed the financial acquisitions threshold if the input tax credits it would have been entitled to, had the acquisitions been for a creditable purpose, do not exceed $50,000 up to 30 June 2012 or $150,000 from 1 July 2012 or 10 per cent of their total input tax credits for the year.

H2 GST — financial supplies; input taxed treatment
General public services — Financial and fiscal affairs ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
2,700 2,800 2,850 3,100 3,300 3,450 3,650 3,850
Tax expenditure type: Exemption, Concessional rate 2012 TES code: H2
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Generally, financial supplies and acquisitions of financial supplies are input taxed. This means financial supplies are not subject to GST, but input tax credits cannot be claimed on inputs to either the supply or to the acquisition of the supply. When input taxed supplies are made to consumers, a tax expenditure arises as less than 10 per cent of the total value added is remitted to the Australian Taxation Office. When input taxed supplies are made to other registered businesses, a negative tax expenditure arises as input tax credits cannot be claimed for this supply.

H3 GST — financial supplies; reduced input tax credits
General public services — Financial and fiscal affairs ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
680 700 720 780 830 870 920 970
Tax expenditure type: Concessional rate 2012 TES code: H3
Estimate Reliability: Low    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Financial supplies are generally input taxed. However, the acquisition of certain supplies (known as reduced credit acquisitions) allows financial service suppliers to claim a reduced credit (either 55 or 75 per cent of the standard input tax credit entitlement depending on the acquisition). The entitlement to the reduced credit in these instances is a tax expenditure.

H4 GST — supplies by charitable institutions and non-profit bodies
General public services — General services ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H4
Estimate Reliability: Not Applicable * Category 3+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Charities and other gift deductible bodies are entitled to a higher GST registration threshold of $150,000. They are entitled to GST-free treatment on non-commercial activities, certain retirement village services, bingo, and sale of second hand goods. Charities can elect to have fund raising treated as input taxed. This option is also available to gift deductible entities and government schools. Simplified accounting methods may be available and a range of other concessions apply.

Certain entities have the option of sepa
rately identifying some or all of their operations and treating each as a separate entity for GST purposes.

H5 GST — child care services
Housing and community amenities ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
600 670 750 840 940 1,030 1,120 1,230
Tax expenditure type: Exemption 2012 TES code: H5
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Generally, child care will be GST-free if the provider is a registered carer or approved child care service as specified under the relevant Commonwealth legislation. In addition, child care supplied at facilities eligible to receive Commonwealth government funding under guidelines made by the Minister responsible for child care is also GST-free. All supplies that are directly related to child care are also GST-free.

H6 GST — water, sewerage and drainage
Housing and community amenities ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
630 720 790 830 910 1,010 1,110 1,220
Tax expenditure type: Exemption 2012 TES code: H6
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

A supply of water is GST-free unless it is supplied in, or transferred into, a container with a capacity of less than 100 litres. The draining of storm water, the emptying of a septic tank and sewerage and sewerage-like services are also GST free. Water sold as a beverage is included in tax expenditure H29.

H7 GST — GST free status of diplomats, diplomatic missions and approved international organisations
General public services — Foreign affairs and economic aid ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
8 8 7 7 7 7 8 8
Tax expenditure type: Exemption 2012 TES code: H7
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Diplomatic missions, consulates and certain international organisations may be reimbursed the GST included in their purchases of certain goods and services, where the purchase is for the official use of the organisation. The GST included in purchases by diplomatic and consular staff, or certain staff of some international organisations, for the private use of the person may also be refundable. The refund must be within the scope of the Diplomatic Privileges and Immunities Act 1967, the Consular Privileges and Immunities Act 1972, or the International Organisations (Privileges and Immunities) Act 1963.

H8 GST — global roaming by visitors to Australia
Transport and communication ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H8
Estimate Reliability: Not Applicable * Category 1+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Telecommunication supplies for global roaming by visitors to Australia are GST-free, consistent with Australia’s treaty obligations under the International Telecommunication Regulations (the Melbourne Agreement). These supplies are consumed in Australia and under the benchmark would therefore be taxable.

H9 GST — tourism; tourist refund scheme
Other economic affairs — Tourism and area promotion ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H9
Estimate Reliability: Not Applicable * Category 2+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

International travellers visiting Australia and Australians travelling overseas may be able to claim a refund of GST paid on certain goods bought in Australia if the total value of the goods is $300 or more, they are purchased within 60 days of departure (30 days prior to 15 February 2013), and the goods are taken with the traveller when they depart Australia.

In addition, residents of Australia’s External Territories (such as Norfolk, Cocos (Keeling) and Christmas Islands) can claim refunds of GST under the tourist refund scheme. Claims can be made if Australian External Territory residents leaving Australia can show proof that the goods have been exported to their External Territory within the required period after the goods were acquired.

H10 GST — importation threshold
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
290 300 350 400 470 520 570 640
Tax expenditure type: Exemption 2012 TES code: H10
Estimate Reliability: Low    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

With the exception of consignments containing tobacco, tobacco products or alcoholic beverages, a GST exemption applies to imports of goods with a customs value of no more than $1,000.

H11 GST — imported services
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
120 150 150 160 170 190 210 230
Tax expenditure type: Exemption 2012 TES code: H11
Estimate Reliability: Low    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Imported services (those that are not done in Australia as specified in section 9-25 of A New Tax System (Goods and Services Tax) Act 1999) which are not subject to a reverse charge are not subject to GST.

H12 GST — sale of boats for export within 12 months of supply
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
- - 10 10 10 10 10 10
Tax expenditure type: Exemption 2012 TES code: H12
Estimate Reliability: Low    
Commencement date: 1 July 2011 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Supplies of eligible boats used for recreational purposes are GST-free if the boats are exported from Australia within 12 months of delivery, with effect from 1 July 2011. Other goods must be exported from Australia within 60 days in order to be GST-free.

H13 GST — tourism; domestic air or sea travel
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H13
Estimate Reliability: Not Applicable * Category 2+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Domestic air or sea travel within Australia by residents or non-residents as part of a wider international arrangement is not subject to GST. Domestic air travel within Australia by non-residents is also GST-free if the ticket is purchased outside Australia. Transport insurance for the above supplies is also GST free.

H14 GST — tourism; inwards duty free
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H14
Estimate Reliability: Not Applicable * Category 3+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Supplies made through an inwards duty free shop to inbound international travellers are not subject to GST.

H15 GST — tourism; travel agents
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
95 90 90 95 95 95 100 100
Tax expenditure type: Exemption 2012 TES code: H15
Estimate Reliability: Low    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

The arranging of overseas travel, accommodation and other services by travel agents in Australia in the course of their business is GST-free. The arranging service must relate to a holiday or supply that takes place or is used overseas.

H16 GST — education
Education ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
2,550 2,800 3,050 3,350 3,700 4,050 4,400 4,850
Tax expenditure type: Exemption 2012 TES code: H16
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Certain education supplies are GST-free. These include education courses, directly related administrative services, curriculum-related goods, student accommodation for students attending a primary, secondary or special education course, excursions and field trips and supplies related to the recognition of prior learning.

H17 GST — health; drugs and medicinal preparations
Health ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
310 330 360 390 420 450 480 520
Tax expenditure type: Exemption 2012 TES code: H17
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Most medicines for human use are GST-free. GST-free medicines include: medicines that can only be supplied on prescription; medicines listed on the Pharmaceutical Benefits Scheme (PBS); medicines listed on the Repatriation Pharmaceutical Benefits Scheme (RPBS); non-prescription drugs that can only be supplied by a doctor, dentist, pharmacist or other prescribed person as described by relevant state or territory law; medicines supplied under the Special Access Scheme; and medicines covered by a written determination by the Federal Health Minister.

H18 GST — health; medical aids and appliances
Health ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
80 85 95 100 110 115 125 135
Tax expenditure type: Exemption 2012 TES code: H18
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

A medical aid or appliance is GST-free if the medical aid or appliance is listed in Schedule 3 to the A New Tax System (Goods and Services Tax) Act 1999, or specified in the regulations and specifically designed for people with an illness or disability and not widely used by others.

The supply of cars for use by disabled persons, spare parts for medical aids and appliances and the services related to the provision of the medical aid or appliance are GST-free. Goods that are the subject of a written determination by the Federal Health Minister are also GST-free, including certain disability supports delivered under the National Disability Insurance Scheme Act 2013.

H19 GST — health; medical and health services
Health ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
2,500 2,700 2,850 3,150 3,400 3,600 3,900 4,150
Tax expenditure type: Exemption 2012 TES code: H19
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Medical services are GST-free if: they are a service for which a Medicare benefit is payable under the Health Insurance Act 1973; they are supplied by, or on behalf of, a medical practitioner; and they constitute a service that is generally accepted in the medical profession as being necessary for the treatment of the patient.

Health services rendered by a recognised professional, as well as hospital treatment are also GST-free. Goods supplied in the course of making GST-free health care services are generally GST-free.

H20 GST — health; private health insurance
Health ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
210 240 250 250 280 290 300 320
Tax expenditure type: Exemption 2012 TES code: H20
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

A supply of private health insurance by a private health insurer (within the meaning of the Private Health Insurance Act 2007) is GST-free. In line with the GST treatment of general insurance, the tax expenditure for this item is based on the difference between the premium income of private health insurers and the value of benefits paid out.

H21 GST — health; residential care, community care and other care services
Health ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
780 830 890 980 1,050 1,120 1,200 1,290
Tax expenditure type: Exemption 2012 TES code: H21
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Some services provided by care and specialist disability providers are GST-free, including certain disability supports delivered under the National Disability Insurance Scheme Act 2013. The quality of care principles found in the Aged Care Act 1997 apply in determining the tax status of specific care services. In general, publicly funded aged or disability care services are GST-free, as are privately funded aged care services which meet the quality of care principles found in the Aged Care Act 1997 and are provided to those needing daily living activities assistance or nursing services.

H22 GST — religious services
Recreation and culture ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
25 25 25 25 30 30 30 35
Tax expenditure type: Exemption 2012 TES code: H22
Estimate Reliability: Low    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Supplies of religious services are GST-free if supplied by a religious institution and the supplied service is integral to the practice of that religion.

H23 GST — supplies of farm land
Agriculture, forestry and fishing ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H23
Estimate Reliability: Not Applicable * Category 2+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Specific supplies of farm land are GST-free. This includes: farm land supplied for farming on which a farming business has been carried on for at least five years and upon which a farming business is intended to continue to be carried on; and subdivided farm land that is potential residential land that is supplied to associates.

Under the GST benchmark, farm land supplied to an unregistered purchaser for farming; or farm land that is potential residential land supplied to an unregistered associate for nil or inadequate consideration; gives rise to a tax expenditure under this item.

No net GST would be collected under the benchmark from farm land supplied for farming to a registered business purchaser.

H24 GST — registration thresholds (small business concessions)
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016&#8209
;17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H24
Estimate Reliability: Not Applicable * Category 3+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Entities (other than taxi operators) with a GST turnover less than $75,000 ($150,000 for non-profit entities), are not required to register for GST. Supplies made by unregistered entities are not subject to GST.

H25 GST — simplified accounting methods
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
13 12 11 11 10 9 9 8
Tax expenditure type: Concessional rate 2012 TES code: H25
Estimate Reliability: Low    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

The Commissioner of Taxation can create simplified accounting methods (SAMs) that some small businesses can choose to apply to reduce their GST compliance costs. SAMs allow taxpayers to apply simple ratios to calculate their GST liabilities (or components of them) rather than accounting for each supply to determine if it is taxable or non-taxable. Being ratios, SAMs will benefit some taxpayers by reducing their GST liabilities while increasing the GST liabilities of others, relative to the amounts calculated using a full GST calculation.

While SAMs are designed to reduce compliance costs rather than provide a tax concession, entities that expect to receive a tax benefit from applying SAMs are more likely to adopt this methodology than those that do not. This would be expected to result in a net tax concession.

H26 GST — supply of precious metal
Mining, manufacturing and construction ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
* * * * * * * *
Tax expenditure type: Exemption 2012 TES code: H26
Estimate Reliability: Not Applicable * Category 2+
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

The first supply of a precious metal (after its refining by or on behalf of the supplier) to a precious metal dealer is GST-free. Subsequent supplies of precious metals are input taxed. The importation of precious metals is a non-taxable importation and GST is not charged on the importation. The tax expenditure here is the loss of tax on the GST-free and input taxed supplies and imports (where this would not be offset by input tax credits) reduced by any input tax credits denied for acquisitions related to the input taxed activities.

H27 GST — cross-border transport supplies
Transport and communication ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
- 2 2 2 2 2 2 2
Tax expenditure type: Exemption 2012 TES code: H27
Estimate Reliability: Low    
Commencement date: 1 July 2010 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Since 1 July 2010, the total transport and insurance cost of imported goods has been included in the calculation of the value of the taxable importation. If the imported good is a non-taxable importation (for example, the supply of the good would be GST-free or the value of the good does not exceed the import threshold of $1,000), any domestic transport or insurance component of the transportation supplied will not be taxed.

H28 GST — Clean Energy Future
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
- - - - - .. .. ..
Tax expenditure type: Exemption 2012 TES code: H28
Estimate Reliability: Low    
Commencement date: 1 July 2012 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

A supply of an eligible emissions unit (within the meaning of the Clean Energy Act 2011)
under the carbon pricing mechanism is GST-free from 1 July 2012 to 30 June 2014. With the proposed repeal of Clean Energy Act 2011 and related legislation from 1 July 2014 the range of eligible emissions units receiving GST-free treatment after that date will be reduced to international emissions units and eligible Australian carbon credits.

Most supplies of eligible emissions units will be creditable acquisitions by GST registered entities with no net GST payable on the transaction, with the result that GST-free treatment does not result in a tax expenditure. Under the GST benchmark, a GST-free supply of an eligible emissions unit will only give rise to a tax expenditure where it is made to an unregistered entity or registered entity for private use.

H29 GST — food; uncooked, not prepared, not for consumption on premises of sale and some beverages
Other economic affairs — Other economic affairs, nec ($m)
2009‑10 2010‑11 2011‑12 2012‑13 2013‑14 2014‑15 2015‑16 2016‑17
5,200 5,400 5,700 5,900 6,200 6,500 6,800 7,100
Tax expenditure type: Exemption 2012 TES code: H29
Estimate Reliability: Medium    
Commencement date: 1 July 2000 Expiry date:  
Legislative reference: A New Tax System (Goods and Services Tax) Act 1999

Most food items for human consumption that are prepared and/or consumed at home are GST-free. Examples of GST-free food include fresh fruit and vegetables, fish, dairy products, bread and meat. Examples of GST-free beverages include unflavoured milk products, tea, coffee, water and fruit juices. In addition, generally the packaging used in the supply of GST-free food will itself be GST-free.