Read: Access full Federal Budget 2018-19 review here
Directors to become personally liable for GST and other indirect tax debts
The Government has announced it intends to extend the Director Penalty Regime to GST, luxury car tax and wine equalisation tax, making directors personally liable for the company’s debts to the ATO in respect of those taxes. There is currently no date of effect contained in the Budget announcement.
We expect this measure to have broad ranging implications for all company directors, particularly in the GST space. To deal with this new level of personal risk, we recommend directors take steps now to understand their potential exposure, and put in place internal controls and measures to give them some level of comfort regarding their company’s GST compliance.
Increasing the alcohol excise refund scheme for domestic brewers and distillers
The Government will increase the alcohol excise refund scheme cap from $30,000 to $100,000 per financial year, providing additional support to domestic brewers, distillers and producers of other fermented beverages such as non-traditional cider.
An additional measure will extend the concessional draught beer excise rates to eight-litre or bigger kegs (current concessional rate applies to containers exceeding 48 litres) from 1 July 2019. Whilst large breweries typically use 50-litre kegs, craft brewers often use smaller kegs, therefore this new measure will remove disadvantages and create a level playing field for smaller to medium sized craft breweries.
Online hotel bookings and GST
The Government is targeting the GST that is not currently paid on the difference between the price overseas tourism operators pay for hotel stays in Australia and the price they charge their customers.
In 2005, the Government introduced measures designed to exclude overseas tourism operators from Australia’s GST net. The 2005 measures enabled overseas entities to remain outside the Australian GST net, thereby simplifying compliance for both the overseas entities and the Tax Office in the process. It was recognised at the time that GST would not be collected on the overseas operator’s mark-up.
What has changed, some 13 years later, is the significant increase in online hotel booking sites, including sites run by overseas operators that can be accessed by Australian residents to book accommodation in Australia. Through the advent of technology, those measures are now disadvantaging Australian tourism operators and causing GST leakage.
From 1 July 2019, offshore suppliers will be required to include supplies of Australian hotel accommodation in their GST turnover for the purpose of determining whether they exceed the $75,000 GST registration threshold. Australian-based tourism operators are likely to welcome the change, as it places them on a level playing field with their overseas counterparts.