A New Tax System (Indirect Tax and Consequential Amendments) Bill 1999 and A New Tax System (Indirect Tax and Consequential Amendments) Bill (No.2) 1999
Membership of the Committee
SENATE ECONOMICS LEGISLATION COMMITTEE
MEMBERSHIP
| Core Members |
|
| Senator B Gibson (Chair) |
(Tasmania, LP) |
| Senator S Murphy (Deputy Chair) |
(Tasmania, ALP) |
| Senator G Chapman |
(South Australia, LP) |
| Senator G Campbell |
(New South Wales, ALP) |
| Senator A Murray |
(Western Australia, AD) |
| Senator J Watson |
(Tasmania, LP) |
| |
|
| Participating Members |
|
| Senator E Abetz |
(Tasmania, LP) |
| Senator R Boswell |
(Queensland, NPA) |
| Senator B Brown |
(Tasmania, AG) |
| Senator D Brownhill |
(New South Wales, NPA) |
| Senator P Calvert |
(Tasmania, LP) |
| Senator S Conroy |
(Victoria, ALP) |
| Senator P Cook |
(Western Australia, ALP) |
| Senator H Coonan |
(New South Wales, LP) |
| Senator W Crane |
(Western Australia, LP) |
| Senator A Eggleston |
(Western Australia, LP) |
| Senator J Faulkner |
(New South Wales, ALP) |
| Senator A Ferguson |
(South Australia, LP) |
| Senator J Ferris |
(South Australia, LP) |
| Senator B Harradine |
(Tasmania, Ind) |
| Senator S Knowles |
(Western Australia, LP) |
| Senator R Lightfoot |
(Western Australia, LP) |
| Senator K Lundy |
(Australian Capital Territory, ALP) |
| Senator B Mason |
(Queensland, LP) |
| Senator J McGauran |
(Victoria, NPA) |
| Senator W Parer |
(Queensland, LP) |
| Senator M Payne |
(New South Wales, LP) |
| Senator J Quirke |
(South Australia, ALP) |
| Senator A Ridgeway |
(New South Wales, AD) |
| Senator C Schacht |
(South Australia, ALP) |
| Senator N Sherry |
(Tasmania, ALP) |
| Senator T Tchen |
(Victoria, LP) |
| Senator J Tierney |
(New South Wales, LP) |
| |
|
| Secretariat |
|
| Peter Hallahan, Secretary |
|
| Graeme Fawns, Principal Research Officer |
SG.64
Parliament House
Canberra ACT 2600 |
Tel: 02 6277 3540
Fax: 02 6277 5719
|
Report
Background to the inquiry
1.1
The Government introduced A New Tax System
(Indirect Tax and Consequential Amendments) Bill 1999 and A New Tax System (Indirect
Tax and Consequential Amendments) Bill (No.2) 1999 into the House of Representatives
on 21 October 1999.
Following a report by the Selection of Bills Committee, the Senate referred the
Bills to this Committee on 30 November 1999 for examination and report by 7 December 1999.[1]
1.2
In its report the Selection of Bills Committee
requested that the Committee consider the following:
- Insurance provisions as they relate to the GST.
1.3
The Committee received one submission to the
inquiry, submitted by the Insurance Council of Australia.
1.4
The Committee conducted a public hearing on the
Bills in Canberra on 6 December 1999. At that hearing, the Committee
received evidence from representatives of the Insurance Council of Australia,
the Department of the Treasury and the Australian Taxation Office. A list of
witnesses who gave evidence at the hearing appears in Appendix 1, and the full
transcript of the hearing is available at the Internet address of https://www.aph.gov.au/hansard.
1.5
The Committee particularly thanks the
representatives of the Insurance Council of Australia, the Department of the
Treasury and Australian Taxation Office who made themselves available for the
Committee's public hearing at short notice. The Committee found the witnesses'
explanations of the amendments contained in the Bills to be comprehensive and
helpful.
Issues raised in evidence
1.6
The Insurance Council of Australia (ICA) advised
the Committee that it strongly supports the amendments in the Bills. The
Council explained that the proposed insurance amendments have developed
following lengthy discussions with the Government.
1.7
The main amendments considered by the Committee:
- remove stamp duty from the GST base when calculating the GST on
an insurance premium; and
- introduce the “Decreasing Adjustment Method” (DAM). This method
offsets the GST liability of a business (the insured) against the entitlement
to an input tax credit of an insurance company (the insurer).
1.8
The amendments ensure that insurance is treated
like any other input cost. The practical effect of the amendments is that GST
will be payable on insurance premiums but not on claims.
1.9
According to the ICA, the amendments simplify insurance claims for registered
businesses.
1.10
Government officials advised the Committee that
the amendments are revenue neutral and will reduce the compliance costs for
businesses. Representatives tabled a number of examples explaining how the new
provisions will work and these are at Appendix 3.
Recommendation
1.11
The Committee recommends that the Senate pass
the Bill.
Senator the Hon. Brian Gibson
Chairman
Labor Senators’ Minority Report
Labor Senators reserve their
position on this legislation.
Senator Shayne Murphy Senator
Stephen Conroy
Deputy Chair
Appendix 1: List of Witnesses
Insurance Council of Australia
Mr Phillip Maguire
Mr Peter Anderson
Mr Peter Barnes
Mr Trevor Jack
Government Officials – Treasury and Australian Taxation
Office
Mr Bruce Quigley
Mr Matthew Bambrick
Mr Paul McCullough
Mr Blair Comley
Appendix 2: Illustration of effect of amendments provided by the Insurance Council of Australia
Illustration of effect of amendments provided by the
Insurance Council of Australia
Appendix 3: Set of examples from the ATO showing a comparison between the current legislation and the amendments
Set of examples from the ATO showing a comparison
between the current legislation and the amendments
Appendix 4: Set of slides presented by Mr Comley to the Insurance Council of Australia
Set of slides presented by Mr Comley to the Insurance
Council of Australia
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