Reclaimed revenue spurs ATO sales tax amendments

Reclaimed revenue spurs ATO sales tax amendments

Buoyed by the success of the September 1 sales tax laws in helping to clean up the industry, Federal Parliament has now passed several amendments further strengthening the legislation.

The Australian Taxation Office (ATO) estimates as much as $400 million worth of business has already been redirected to legitimate operators in the wake of the September 1 changes, according to Mike Cebalo, assistant commissioner, withholding taxes.

"On a normal computer system, sales tax is around an eighth of the retail price so with every dollar the tax system loses, legitimate channels lose turnover," he said.

"We estimate the tax changes have already raised $50 million, so if you multiply that by eight it gives you an idea of the turnover being redirected to legitimate channels."

The Federal Government plans to maintain that momentum with the addition of three new amendments to the existing legislation.

Firstly, the law has been updated to more clearly identify the Part 7A goods that need to be authorised for tax exemption by the ATO. The modified list will be available from the ATO's Web site ( in January.

The initial sales tax legislation, which took effect on September 1, stipulates all organisations purchasing goods tax free for resale must be accredited by the ATO. Evidence of past sales tax law compliance is required.

An accredited person buying from an unaccredited source on a tax-inclusive basis is also required to withhold the sales tax component of the selling price and forward it to the ATO.

Sales tax component

Provision has now also been made for the sales tax legislation to be extended to include exports. So non-compliant organisations falsely claiming sales tax exemptions on the pretence of exporting those goods are at risk of prosecution.

However, Cebalo said there are no plans to enforce the legislation "unless the need arises".

For those organisations that do breach any elements of the sales tax laws, though, stiffer penalties will apply following the recent amendments.

Individual offences now incur a fine of $5500.

Cebalo claims industry reaction to the new sales tax laws has been largely positive.

"Overall, based on feedback from the industry and intelligence from our field staff, the system is going very well in practice," he said.

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