THE GST has turned two but the impact of its introduction remains.Cash flow and compliance problems remain the two biggest problems facing businesses post the GST’s introduction.However, other GST issues appear to have settled down.
THE GST has turned two but the impact of its introduction remains.
Cash flow and compliance problems remain the two biggest problems facing businesses post the GST’s introduction.
However, other GST issues appear to have settled down. Most accountants report that dealing with the GST and filling out the quarterly or monthly Business Activity Statements have become routine.
Even one year ago accountants were wondering when the barrage of calls from their clients about GST issues would end.
The cost of complying with tax increased markedly and still remains high, particularly for retailers.
However, the GST has proved a boon for some businesses. A recent survey showed it had created a $2 billion industry in its wake.
The GST also appears to have proved to be a Government bonanza. The tax is flowing in at a far greater rate than was expected.
However, the State Governments are crying poor because they feel they are not getting the full benefits of the tax. Some commentators believe the extra revenue is being swallowed up by extra spending.
Small Business Development Corporation managing director George Etrelezis said compliance costs were one of the main problems still facing business.
“Small businesses are still doing a lot more paperwork and are still coming to terms with some of the changes,” he said.
WA Independent Grocers Association president John Cummings said the GST was still costing businesses a lot of money.
“We still have the situation where we have to buy analgesics such as Panadol and pay GST on it, but are required by law to sell it GST free,” he said.
“This means we have two prices floating around on the computer and it causes problems.
“As a retailer it is my responsibility to make sure the GST is charged.
“The end responsibility of getting it right is down to the retailer.”
There were a spate of business closures in the first year of the GST but how many business closed is still uncertain because it appears no agency or organisation has kept figures on whether the GST was a factor or not.
Fallon Group partner Tony Ince said anecdotal evidence indicated many of the smaller businesses that closed were ill prepared for the introduction of the new tax.
“The GST was not as much of an issue for bigger businesses,” he said.
“The GST has probably been less of an issue than we thought it would be. The Australian Tax Office took a fairly laid back approach to implementing it – concentrating more on helping businesses come to terms with the new tax.”
Another key problem was businesses spending the GST money they had collected and not having sufficient cash reserves to meet the shortfall when it came time to remit that money to the ATO.
McKessar Tieleman partner Brenton Siviour said the spending of GST monies had caused many businesses problems.
“Basically people didn’t ac-count for things properly and it got out of hand for them,” he said.
Mr Etrelezis said small businesses were still facing some cash flow pressures.
“They need better cash flow management. If one business starts delaying its payments to its suppliers then it creates a chain reaction problem. The latest interest rate hikes are likely to accentuate that,” he said.
There was a strong argument that the GST would build better businesses because its quarterly or monthly reporting requirements would force them to take a closer look at how their businesses were travelling.
Mr Etrelezis said a lot more of the SBDC’s clients were starting to use electronic commerce and electronic banking.
“I think that’s a good indicator that businesses are more aware of their financials,” he said.
Hambley’s Dewsons owner Graham Hambley said the financial information from the GST had made little difference to the way his 56-year-old business was run.
“As far as we’re concerned the GST has cost us a few more dollars from the compliance point of view. Our accountant helped us put a system in place and once that was up and running it became a part of the way we had to do business,” he said.
“I can’t say the BAS process highlighted any business problems.”
Mr Ince said he was surprised at the number of people who remained unaware of the basics of the GST.
“We’re finding a lot of businesses aren’t too concerned about the GST. They are thinking it will all even out, and that’s something the ATO will crack down on soon,” he said.
Cash flow and compliance problems remain the two biggest problems facing businesses post the GST’s introduction.
However, other GST issues appear to have settled down. Most accountants report that dealing with the GST and filling out the quarterly or monthly Business Activity Statements have become routine.
Even one year ago accountants were wondering when the barrage of calls from their clients about GST issues would end.
The cost of complying with tax increased markedly and still remains high, particularly for retailers.
However, the GST has proved a boon for some businesses. A recent survey showed it had created a $2 billion industry in its wake.
The GST also appears to have proved to be a Government bonanza. The tax is flowing in at a far greater rate than was expected.
However, the State Governments are crying poor because they feel they are not getting the full benefits of the tax. Some commentators believe the extra revenue is being swallowed up by extra spending.
Small Business Development Corporation managing director George Etrelezis said compliance costs were one of the main problems still facing business.
“Small businesses are still doing a lot more paperwork and are still coming to terms with some of the changes,” he said.
WA Independent Grocers Association president John Cummings said the GST was still costing businesses a lot of money.
“We still have the situation where we have to buy analgesics such as Panadol and pay GST on it, but are required by law to sell it GST free,” he said.
“This means we have two prices floating around on the computer and it causes problems.
“As a retailer it is my responsibility to make sure the GST is charged.
“The end responsibility of getting it right is down to the retailer.”
There were a spate of business closures in the first year of the GST but how many business closed is still uncertain because it appears no agency or organisation has kept figures on whether the GST was a factor or not.
Fallon Group partner Tony Ince said anecdotal evidence indicated many of the smaller businesses that closed were ill prepared for the introduction of the new tax.
“The GST was not as much of an issue for bigger businesses,” he said.
“The GST has probably been less of an issue than we thought it would be. The Australian Tax Office took a fairly laid back approach to implementing it – concentrating more on helping businesses come to terms with the new tax.”
Another key problem was businesses spending the GST money they had collected and not having sufficient cash reserves to meet the shortfall when it came time to remit that money to the ATO.
McKessar Tieleman partner Brenton Siviour said the spending of GST monies had caused many businesses problems.
“Basically people didn’t ac-count for things properly and it got out of hand for them,” he said.
Mr Etrelezis said small businesses were still facing some cash flow pressures.
“They need better cash flow management. If one business starts delaying its payments to its suppliers then it creates a chain reaction problem. The latest interest rate hikes are likely to accentuate that,” he said.
There was a strong argument that the GST would build better businesses because its quarterly or monthly reporting requirements would force them to take a closer look at how their businesses were travelling.
Mr Etrelezis said a lot more of the SBDC’s clients were starting to use electronic commerce and electronic banking.
“I think that’s a good indicator that businesses are more aware of their financials,” he said.
Hambley’s Dewsons owner Graham Hambley said the financial information from the GST had made little difference to the way his 56-year-old business was run.
“As far as we’re concerned the GST has cost us a few more dollars from the compliance point of view. Our accountant helped us put a system in place and once that was up and running it became a part of the way we had to do business,” he said.
“I can’t say the BAS process highlighted any business problems.”
Mr Ince said he was surprised at the number of people who remained unaware of the basics of the GST.
“We’re finding a lot of businesses aren’t too concerned about the GST. They are thinking it will all even out, and that’s something the ATO will crack down on soon,” he said.
