Bills Digest No. 135  1999-2000Primary Industries (Excise) Levies (GST Consequential Amendments) Bill 2000


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details

Passage History

Primary Industries (Excise) Levies (GST Consequential Amendments) Bill 2000

Date Introduced: 16 February 2000

House: House of Representatives

Portfolio: Agriculture, Fisheries and Forestry

Commencement: Immediately after the commencement of the A New Tax System (Goods and Services Tax) Act 1999 which is expected to be 1 July 2000

Purpose

To amend the Primary Industries (Excise) Levies Act 1999 so that the sale price used to calculate the amount payable for the Deer Velvet Levy and the Goat Fibre Levy does not include the GST.

Background

Levies on agricultural, livestock and forestry products are imposed by the Commonwealth at the request of the relevant industry. Funds raised by the levies are matched by the Commonwealth up to a maximum of 0.5 per cent of the relevant industry's gross value of production. The principal uses of the proceeds raised by agricultural, livestock and forestry levies include the funding of research and development, statutory marketing authorities and health and safety monitoring. These activities are usually beyond the scope of small, scattered rural enterprises to organise and to put in place on their own.

The Primary Industries (Excise) Levies Act 1999 (the Principal Act) consolidated 27 levies into one Act. The Schedules to the Principal Act impose levies on specific agricultural, livestock and forestry products. Schedule 8 of the Principal Act imposes the Deer Velvet Levy and Schedule 11, the Goat Fibre Levy.

Deer Velvet Levy

A levy is imposed on the value of deer velvet produced and sold in Australia, and deer velvet used by or on behalf of a producer in the production of other goods. The rate of the levy is 5 per cent of the sale value of deer velvet. It is payable by the producer of deer velvet.(1) 'Sale value' is defined in the Principal Act as the price paid for deer velvet.

Goat Fibre Levy

A levy is imposed on the value of goat fibre produced and sold in Australia. The proceeds of the levy go to the Rural Industries Research and Development Corporation, under the provisions of the Primary Industries and Energy Research and Development Act 1989. The rate of the levy is 1.5 per cent of the sale value of goat fibre.(2) 'Sale value' is defined in the Principal Act to include the price paid for the fibre.

Goods and Services Tax

Section 9-75 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) defines 'price' as an amount that includes the GST. In other words, the cost of the goods and services tax is 'embedded' in prices rather than identified separately.(3) Section 177-12 of the GST Act(4) deals with the GST implications of references to price, value etc. in other Acts. Subsection 177-12(1) states that in any Act, unless the contrary intention appears, a reference to price would mean including GST.

The amendments in this Bill provide that, for the purposes of calculating the applicable levy, the 'price' of deer velvet and the 'price' of goat fibre, will be the 'price' excluding GST.

Main Provisions

Item 1 of Schedule 1 adds two new subclauses to clause 1 of Schedule 8 (Deer Velvet Levy). The proposed subclauses will have the effect of allowing the Deer Velvet Levy to be calculated on the sale value of deer velvet, excluding GST.

Item 2 adds two new subclauses to clause 1 of Schedule 11 (Goat Fibre Levy). The proposed subclauses will have the effect of allowing the Goat Fibre Levy to be calculated on the sale value of goat fibre, excluding GST.

Endnotes

  1. The deer industry was established in Australia in the early 1970s when interest in the farming of deer spread here from New Zealand and its commercial value was recognised. Deer farmers have three potential sources of income:
  • sale of slaughtered deer for venison
  • sale of velvet antler and other by-products
  • sale of breeding stock, which in recent years has included export of live deer.
Velvet antler is the complete antler harvested from male deer at a precise stage when it is soft and vascular before it calcifies and hardens. All male deer grow and shed their antlers in an annual cycle. Not all species of deer farmed in Australia are used for velveting. Deer velvet is a highly prized substance in the practice of Asian medicine and it is also being increasingly used in western communities. Recent research at Royal North Shore Hospital has demonstrated the value of powdered deer velvet in ameliorating certain types of arthritis. Deer velvet is frozen on farm after harvest and is sold either through the industry-run velvet pools or direct to Asian buyers. Traditionally the velvet market has been volatile but in recent years prices have been relatively stable at around $120/kg for top grades. Good quality mature red stags can yield up to 3kg or more. Most Australian-produced velvet is processed and used locally, but the major world markets for velvet are China, Korea, Hong Kong, Taiwan and Singapore. The Australian Bureau of Statistics estimated that there were about 160,000 deer in Australia in 1996-97. Australia's major competitor on the world market is New Zealand which farms around 1.2 million deer. (Information from The new rural industries: a handbook for farmers and investors, edited by Keith Hyde, Rural Industries Research & Development Corporation, Canberra, 1998, p. 32-38.)
  1. Mohair and cashmere are the principle goat fibres produced in Australia. Both are textile fibres used in the production of luxury garments. Fibre-producing goats also benefit pasture and help to control many weeds such as blackberries, thistles and serrated tussock. Australian-grown mohair has been sold on international markets for over 25 years. Traditionally the major producing countries of mohair have been South Africa, USA (principally Texas) and Turkey. Australian production of mohair is valued at approximately $2 million a year. Australian greasy mohair is sold at auction by several brokers, and most is exported. Mohair is generally exported in a greasy state to Europe, India, Taiwan and Japan. In past years, Australia has processed up to 40 per cent of its mohair, and some finished knitwear was produced. (Information from The new rural industries: a handbook for farmers and investors, edited by Keith Hyde, Rural Industries Research & Development Corporation, Canberra, 1998, p. 50-54.)
Cashmere production was first recognised as a possible industry for Australia in the early 1970s. Feral goats mainly from pastoral areas of Australia were used as the initial stock. Cashmere is recognised as a luxury fibre, commanding some of the highest prices in the world for textiles. The finer portion of the cashmere goes into luxury knitwear, sometimes as a blend with silk. The coarser products are used in the weaving trade for items such as scarves, travel rugs and cloth for luxury coats and suits. Unlike mohair, which is more subject to the vagaries of fashion, cashmere has a high proportion of perennially loyal consumers. China is the major producer of cashmere. (Information from The economics of a commercial cashmere goat enterprise, by Lloyd Davies and Geof Murray, Rural Industries Research and Development Corporation Research paper series no. 97/10, January 1997.)
  1. Sydney Morning Herald, 26 June 1998, p. 1.
  2. Inserted into the GST Act by the A New Tax System (Indirect Tax and Consequential Amendments Act (No. 2) 1999.

Contact Officer and Copyright Details

Rosemary Bell
13 March 2000
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 2000

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 2000.

Back to top


Facebook LinkedIn Twitter Add | Email Print