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Tax Laws

Tax Laws Amendment (Long-term Non-reviewable Contracts) Act 2005

Long Term Non-reviewable Contracts

his recent amendment to the Australian Tax legislation administering GST, requires existing long term contracts at the time of the introduction of the GST and which to date have been exempted from GST, to be now brought into the GST Scheme from 1 July 2005.

The legislation calls for parties to such contracts to negotiate how the GST component is to be introduced into these contracts and introduces an Arbitration process in situations where parties cannot agree. This process is described in an information brief prepared by the Australian Tax Office (ATO).

Members of the Institute of Arbitrators & Mediators Australia have been nominated in the Regulations to this Act to appoint Assessors under the Arbitration provisions, who will make an equitable determination for payment of the GST in these situations. To commence the Arbitration process or obtain further details you can contact the Institute through the following means: -

E-mail: IAMA Nominations Officer
Phone: (07) 3218 2168
Fax: (07) 3220 2133

IAMA Procedures

On receipt of a request from a supplier under the contract for the appointment of an Assessor, IAMA will nominate an Assessor from its practitioner membership, to determine the matter. The period allowed for the assessment is specified in the legislation, and it must be completed and reported within 28 days of the completion of the initial 28 days allowed for the recipient to consider and reject the original GST payment arrangement offer from the supplier. Once appointed the Assessor will take full responsibility for conduct of the assessment and will provide a determination. Following the assessment 28 day allowance, a further 21 day period is allowed for recipients to accept or reject the assessors determination . In all this process will take 77 days. The ATO has produced some Questions and Answers advice on this aspect of the legislation.

Requests for appointment: should be forwarded in a form similar to the attached Application letter. Included with the request should be:-

a) Fees: An administrative fee of $440 incl GST.

b) Information: Requests should include the following information from the Supplier (the party making the request) and about the Recipients (the other party or parties to the contract to be assessed)

  • Organisation Name:
  • Contact person:
  • ABN / ACN
  • Physical Address:
  • Contact Details: (e-mail address / telephone / fax)
  • Details of Contract(s):
  • Copy of Contract :
  • Submissions: (specifying the impact of the GST on the cost of supply)
  • Cover note: (the request for appointment should be provided with a cover note signed by an authorised officer of the Supplier including the following words:

"In making the attached application we provide to IAMA and the Assessor an undertaking that to the fullest extent permissible by the law that they will not be pursued for liability by us for anything done or omitted to be done in good faith:

(a) in exercising their functions under this request for or subsequent appointment, or

(b) in the reasonable belief that the thing was done or omitted to be done in the exercise of their functions under this request or appointment.

We also recognise that the assessor will charge fees for the performance of the assessment and grant the right to IAMA to hold the Assessor's assessment pending the payment of those fees. Subject to such fees being reasonable for the skills of the assessor and the time required to complete the assessment.

We also recognise that the assessor may have to, as part of the function of assessment, make enquiries of us, the recipient or other persons or firms. "

IAMA Process

Assessors appointed by IAMA under the Arbitration scheme will be fully responsible for the conduct of the assessment, and will initially contact the supplier to agree the process, terms and the procedures to be adopted to ensure an appropriate flow of information and procedural fairness.

Assessment Process: while the process will be determined by each Assessor, IAMA commends to each Assessor that he or she should :-

a) notify the Recipient of the Application and if the documents provided with the application have not been provided to them, should make them available to them;

b) confirm that they have no known conflict of interest in accepting appointment;

c) advise the recipient that they are allowed 2 business days to raise objection to appointment based on known conflict;

d) settle their terms of engagement with the supplier;

e) require all fees to be paid to IAMA on trust in advance of any determination;

f) seek from the recipient any submissions that they may have within 3 business days of them being served with a copy of the application;

g) make all reasonable efforts to ensure that any requests for information made of a party to the assessment and responses are to such request are also passed to the other party for comment. This will not respond to responses to responses;

h) be responsible for setting time lines for responses;

i) complete the assessment within 28 days of completion of the initial offer 28 days, or advise the supplier if because of application delays it is impractical to meet this deadline; and

j) provide to IAMA a complete copy of the assessment and the reasons for such assessment.

Sample Application Letter

[date]

Mr Warren Fischer
National President
The Institute of Arbitrators & Mediators Australia
PO Box 10525
Level 23, 127 Creek St. QLD 4000

Dear Mr Fischer,

Application For Appointment of a GST Assessor – For Long Term Non-Reviewable Contract

As the Supplying party in a long term non-reviewable contract with [name of recipient], we seek appointment of an assessor subject to the requirements of Schedule 1, Section 15L of Tax Laws Amendment(Long-term Non-reviewable Contracts) Act 2005.

In accordance with the requirements you have developed to facilitate the operation of the scheme we provide the following information:

Supplier Information

Organisation Name:
Contact person:
ABN / ACN
Address:
Contact Details: (e-mail address / telephone / fax)
Details of Contract:
Copy of Contract: See attachment B
Submission: (specifying the impact of the New Tax System changes on the cost of supply) See attachment A

Recipient Information

Organisation Name:
Contact person:
ABN / ACN
Physical Address:
Contact Details: (e-mail address / telephone / fax)

In making the attached application we provide to the Arbitrator, IAMA and the Assessor an undertaking that to the fullest extent permissible by the law that they will not be pursued for liability by us for anything done or omitted to be done in good faith:

    1. in exercising their functions under this request for or subsequent appointment, or
    2. in the reasonable belief that the thing was done or omitted to be done in the exercise of their functions under this request or appointment.

We also recognise that the assessor will charge fees for the performance of the assessment and grant the right to IAMA to hold the Assessor's assessment pending the payment of those fees. Subject to such fees being reasonable for the skills of the assessor and the time required to complete the assessment.

We also recognise that the assessor may have to, as part of the function of assessment, make enquiries of us, the recipient or other persons or firms.

[Signature block of authorised officer]

Attachments:

A. Submissions to be passed to Assessor on appointment

B.Copy of the Contract

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