What transitional arrangements will be put in place for the introduction of the GST?

Post-election consultation

Offset for WST paid

Phase out luxury WST rate

Phase in of input tax credits for motor vehicles
	Without transitional arrangements some people will take advantage of the change to the goods and services tax (GST) while others could be unfairly disadvantaged.
For example, consumers and businesses may delay the purchase of goods that are subject to high rates of wholesale sales tax (WST) to take advantage of price falls expected to occur after the introduction of the GST.  Businesses who currently pay WST may also delay the purchase of motor vehicles in order to obtain an input tax credit.  In the absence of effective transitional measures there is also a risk that some goods could be subject to both the WST and the GST.
The Government has designed transitional arrangements to address these issues. 
Close cooperation between business and the Government will ensure that close attention is paid to transitional issues.  The Tax Consultative Committee, chaired by a distinguished Australian, will be established to advise the Government and to ensure that the views of the business community are fully taken into account during the transition period.
Businesses holding WST‑paid stock for resale will be allowed a credit (equal to the WST paid on their stock) to be offset against their GST liability.  This will ensure that only one tax (the GST) applies to such stock.
The 32 per cent WST rate will be phased down to reduce market disruption.  Items (excluding furs and jewellery) currently taxed at the 32 per cent WST rate will initially be subject to the standard 22 per cent rate from the date of passage of the GST legislation.
Allowing immediate full GST input tax credits for motor vehicles could disrupt motor vehicle markets, as businesses currently bearing WST on vehicles could delay purchases.
Full input tax credits for motor vehicles will therefore be phased in over two years.  No input tax credits will be allowed for motor vehicle purchases in the GST’s first year of operation.  In the second year, half the value of the standard input tax credit will be allowed.
•	Bodies that currently purchase motor vehicles exempt from WST will have no incentive to delay purchases.  They will be able to claim full input tax credits from the date of implementation.	
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What transitional arrangements will be put in place for the introduction of the GST?

GST implementation date is critical for contracts and leases
	Where contracts for the supply of goods and services span the implementation date for the GST, the time of delivery of goods or the time of performance of the services will determine whether the supply is subject to WST or GST.
For construction contracts spanning the implementation date, a valuation at implementation date will determine the part of the contract completed at that date that will not be subject to GST.  The remaining part completed after implementation date will be subject to GST.
•	Full input tax credits will be available for any GST paid on inputs bought after the implementation date.
Payments under a lease will be subject to the GST only to the extent that they are attributable to a period after the implementation date.	

For further information	

‘A New Tax System’  Chapter 2.
Other fact sheets:  No. 200  ‘The GST at a glance’ and No. 206  ‘GST Glossary:  What do the new terms mean?’.
The Government’s Tax Reform Website:  http://www.taxreform.gov.au
Tax Reform Information Centre:  Telephone 13 30 99