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114 GOODS & SERVICES TAX - MAGAZINE [Vol. 1
GST in other countries
2. GST was, for the first time, adopted in France in the year 1954. Earlier,
France was having a VAT system. Now GST is levied in nearly 140
countries. In the discussion to follow, the salient aspects of the tax as
prevalent in some countries are being mentioned for comparative study :
2.1 AUSTRALIAN GST - Australian GST has been evolved after consideration
of models of other countries. It is broadly structured on the New Zealand
GST though Australia has taken benefit of the experiences and laws of
other countries also. It was introduced by the Australian Federal Government
in the year 1999 effective from July 1, 2000. The basic objective of
this tax was to broaden the tax base for goods and services.
In Australia, the GST is a broad based tax at 10 per cent on most goods and
services and is included in the price paid. Registered business units are
entitled for tax credit and the burden of the tax ultimately falls on the
consumers for goods purchased and services availed of. Most food items
like meat, fruits and vegetables are exempt from GST barring items like
prepared food, take away food, restaurant meals, confectionery, icecream,
snack foods, alcoholic beverages and soft drinks. Educational and
health services, eligible child care, exports of goods and services, religious
services, non-commercial activities of charitable institutions, cars for use
of disabled people and few other goods and services are also not subjected
to GST.
Some other aspects of Australian GST are :—
� The concept of Time of Supply is dealt with through a series of
attribution rules that dictate when a GST liability arises. The concept
of Place of Supply is achieved through a series of rules that connect
various supplies with Australia, thereby making them potentially
taxable.
� Another unique feature of the Australian legislation is the introduction
of the concept of reduced input tax credits. Those that make
financial supplies are able to claim reduced credits for certain inputs
used to make those supplies. Primarily it is for those services purchased
externally that could have been provided in-house.
� In drafting the law, the Australian approach was to use language that
was as descriptive as possible. For example, instead of labelling
supplies of things such as financial supplies as exempt, they are called
input taxed supplies. It helped to understand law easily.
2.2 NEW ZEALAND’S GST - New Zealand imposes GST on almost all goods
and services at the rate of 12.5 per cent. Taxable goods and services
include all types of real and personal properties other than money.
Services cover everything other than goods like repair services, doctor’s
services, accountant’s services, etc. However, these have to be part of
taxable business activity. Such goods and services do not include :—
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 24