The Commonwealth Treasury


Tax Consultative Committee

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Chapter 1

Terms of Reference
and Recommendations

Background to the Committee

On 13 August 1998 the Prime Minister announced a wide ranging reform to Australia’s taxation system. The reforms were documented in the publication Tax Reform: not a new tax, a new tax system. The Government’s goals were as follows:

The package foreshadowed a targeted consultation process, to be undertaken by a Tax Consultative Committee, to assist in determining the final design of five key matters in the GST.

Terms of reference

The Tax Consultative Committee was appointed by the Treasurer, the Hon Peter Costello MP, on 26 October 1998. The Treasurer announced the Committee’s terms of reference on 27 October 1998 as follows:

  1. The Government announced, in Tax Reform: not a new tax, a new tax system, that a distinguished Australian would be appointed to chair a Tax Consultative Committee to assist the Government in targeted consultation on outstanding GST design issues.
  2. The design issues the Government requires assistance with are determining the scope of four of the GST-free areas as follows:

3. The Committee will also consult on specified transitional arrangements relating to motor vehicles.

  1. In framing its recommendations to the Government, the Tax Consultative Committee will need to:

5. Given the Government’s proposed implementation timetable for tax reform, the Tax Consultative Committee will report its recommendations to the Government by 13 November 1998 in a form readily transferable into legislation.

6. The Committee may invite submissions and seek information from any persons or bodies to assist in reporting to the Government. Policy and implementation issues raised with the Committee that fall outside the scope of this consultation process will be immediately referred to the Government’s Taxation Reform Task Force.

Summary of recommendations

The Committee’s recommendations are as follows:

Health

Medical (health) services

Recommendation 1

GST-free treatment should apply to:

Hospital services

Recommendation 2

GST-free treatment should apply to:

Residential care

Recommendation 3

Qualifying institutions and projects are those:

Community care

Recommendation 4

GST-free treatment should apply to:

Disability services

Recommendation 5

Medical appliances and aids

Recommendation 6

Drugs and medicines

Recommendation 7

GST-free treatment should apply to:

Education

Recommendation 8
Recommendation 9
Recommendation 10
Recommendation 11
Recommendation 12
Recommendation 13
Recommendation 14
Recommendation 15
Recommendation 16
Recommendation 17
Recommendation 18

Religious services

Recommendation 19

GST-free treatment should apply to a service provided by a religious institution:

Non-commercial activities of charities

Recommendation 20

The Government should adopt an approach that defines a ‘non-commercial’ supply by a tax deductible body as:

‘Nominal or insubstantial consideration’ is a payment of a price that is less than 50 per cent of the normal market value of the supply.

Motor vehicles – transitional arrangements

Recommendation 21

Review mechanism

Recommendation 22

Compliance costs

Recommendation 23