A New Tax System (Goods and Services Tax Imposition (Recipients)—Customs) Act 2005
In ForceCTH
Jurisdiction
Commonwealth
Act Number
1 of 2005
Collection
act
Plain English Summary
2/10 complexity
What this law does, in plain terms
This Act makes the goods and services tax (GST) a tax that can be collected as a duty at the border (a "duty of customs"). In practice it treats GST that would be payable by the recipient of a taxable supply as a customs duty so it can be collected through customs processes (see section 3(2)).
It sets the GST rate at 10% (section 4).
It does not authorise taxing property that belongs to an Australian State (section 5). The phrase "property of any kind belonging to a State" uses the constitutional meaning in section 114 of the Constitution (section 5(2)).
The Act uses the same definitions of "GST law", "recipient" and "taxable supply" as in the A New Tax System (Goods and Services Tax) Act 1999 (section 3(3)).
Who this affects
Importers, overseas suppliers and Australian recipients of imported taxable supplies where GST would otherwise be payable by the recipient under the GST law. Those recipients are the people for whom the tax is treated as a customs duty and who can be required to pay it at the border (s3(2)).
Businesses registered for GST are affected indirectly because they remain subject to the GST law's input tax credit rules (definitions are imported by s3(3)).
State governments are explicitly excluded from having their property taxed under this Act (s5).
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
The GST that is payable under the general GST law is treated, for the purposes covered by this Act, as imposed under the name "GST" (s3(1)).
That treatment applies only to GST that (a) would be imposed on the recipient of a taxable supply, and (b) is a duty of customs as contemplated by section 55 of the Constitution (s3(2)).
The rate for that GST is fixed at 10% (s4).
Any GST obligations, entitlements to input tax credits, and other substantive rules remain those in the main GST Act because the definitions are imported by reference (s3(3)).
Stated purpose and a practical test of its effects
The Act's stated purpose is to implement the GST regime by making certain GST liabilities collectible as customs duties. The practical effect is to permit collection of recipient‑based GST at importation through customs processes rather than (or in addition to) other collection mechanisms.
Costs, incentives, trade‑offs and implementation issues to note
Who pays: The legal incidence is on the recipient of the taxable supply (s3(2)(a)). Practically, importers or their agents typically pay GST at the border and may recover it later under GST law (subject to input tax credit rules).
Cash‑flow and compliance: Collecting recipient‑based GST at the border shifts timing — recipients/importers may need to pay GST up front when goods enter Australia, creating short‑term cash‑flow costs. Businesses with input tax credit entitlements recover GST under the GST Act, but only after complying with GST registration and reporting rules (s3(3)).
Administrative burden: This makes customs authorities the collection point for certain GST liabilities. That concentrates enforcement and collection in border processes; it may reduce evasion on imports but increases customs administrative responsibilities.
Interaction with private contracts and markets: The Act does not change the substantive GST rules about who ultimately bears the economic cost (those are in the GST Act). It changes the collection mechanism, which can affect pricing and working capital for importers and buyers of imported goods.
Discretion and bureaucracy: The Act itself contains no novel discretionary powers; it relies on existing customs collection mechanisms and the GST Act for substantive rules. Implementation complexity depends on the administrative systems of customs and the ATO.
Constitutional and legal limits: The Act deliberately limits the scope to GST that qualifies as a "duty of customs" under section 55 of the Constitution (s3(2)(b)) and preserves the constitutional exemption for State property (s5). That narrows the tax's reach to areas where it can validly operate as a customs duty.
Key sections to glance at
Section 3: imposes GST as a customs duty in the specified circumstances (recipient‑based, constitutional duty of customs).
Section 4: fixes the GST rate at 10%.
Section 5: exempts State property from taxation under the Act.
Bottom line: The Act does not rewrite the GST system. It is a narrow, technical measure that classifies recipient‑based GST as a customs duty for importation and collection purposes, fixes the rate at 10%, and preserves the constitutional exemption for State property (ss3–5).