FEDERAL Labor’s GST rollback proposal runs the risk of returning Australian businesses to the old sales tax days and creating two separate tax systems.
FEDERAL Labor’s GST rollback proposal runs the risk of returning Australian businesses to the old sales tax days and creating two separate tax systems.
Labor has proposed allowing businesses with turnovers of less than $2 million to remit a quarterly tax instalment, calculated on their quarterly turnover using a ratio assigned by the Australian Tax Office.
Businesses with a turnover of more than $2 million will continue to use existing forms to remit their GST.
Labor also has proposed exempt-ing pharmacies and meat processors from the GST, something comment-ators believe will lead to the sort of problems businesses faced under the old sales tax regime.
It also wants to give small businesses statutory power to claim interest on late debts from big business. Late payment will be defined as a payment not received within 30 days.
However, Labor also says purchasers and suppliers are free to make their own arrangements but “these must be fair to small business”.
For the purposes of this policy a small business is defined as one with less than 20 employees and a big business as one turning over more than $20 million.
Fallon Group director Tony Ince said Labor’s GST policy was fine when considered on its own.
“But on top of the system we already have it will make things more complicated,” he said.
“In five years we’ll have two tax systems – one for small business and one for big business. The GST will be for people with a turnover of more than $2 million and a turnover tax for those with a turnover of less than $2 million.
“It’s best to leave the tax system alone. Businesses have already gone through enough pain. We have six or seven different GST rates now as it is.”
Institute of Chartered Accountants tax spokesman Roger Sullivan said people would only use the ratio system if it worked out to be in their favour.
“Ratios are fine so long as the business continues along in a stable manner,” he said.
“Once the business does some-thing different such as a refit or even bringing in new point of sale equipment they’ll be forced to go back to the original GST system.
“It remains to be seen how easy it will be for people to flip flop between the two systems.
“The special rule for pharmacies and meat processors is returning us to the old sales tax regime. Once you put a crack in the wall you’ll have loads of business groups coming up for exemptions.
“At the end of the day this will make the system more difficult. This goes right back to the old sales tax-exempt problems. The onus was on the vendor to ensure the person they were supplying had a genuine sales tax exemption.”
Chamber of Commerce and Industry chief executive Lyndon Rowe said the good thing about Labor’s proposal was that it was a “minor tweaking” and not roll back.
“That’s good because there is less chance of this making things more complicated,” Mr Rowe said.
“Administering the turnover tax could prove difficult.”
Mr Rowe described the Government’s proposal to allow small businesses to charge interest on overdue debt as “crazy”.
“That should be a business to business matter, not something the Government should become in-volved with,” he said.
“The risk of not getting paid is a normal commercial risk.
“The Chamber believes in free enterprise and it should be the Government’s role to facilitate that.”
Labor has proposed allowing businesses with turnovers of less than $2 million to remit a quarterly tax instalment, calculated on their quarterly turnover using a ratio assigned by the Australian Tax Office.
Businesses with a turnover of more than $2 million will continue to use existing forms to remit their GST.
Labor also has proposed exempt-ing pharmacies and meat processors from the GST, something comment-ators believe will lead to the sort of problems businesses faced under the old sales tax regime.
It also wants to give small businesses statutory power to claim interest on late debts from big business. Late payment will be defined as a payment not received within 30 days.
However, Labor also says purchasers and suppliers are free to make their own arrangements but “these must be fair to small business”.
For the purposes of this policy a small business is defined as one with less than 20 employees and a big business as one turning over more than $20 million.
Fallon Group director Tony Ince said Labor’s GST policy was fine when considered on its own.
“But on top of the system we already have it will make things more complicated,” he said.
“In five years we’ll have two tax systems – one for small business and one for big business. The GST will be for people with a turnover of more than $2 million and a turnover tax for those with a turnover of less than $2 million.
“It’s best to leave the tax system alone. Businesses have already gone through enough pain. We have six or seven different GST rates now as it is.”
Institute of Chartered Accountants tax spokesman Roger Sullivan said people would only use the ratio system if it worked out to be in their favour.
“Ratios are fine so long as the business continues along in a stable manner,” he said.
“Once the business does some-thing different such as a refit or even bringing in new point of sale equipment they’ll be forced to go back to the original GST system.
“It remains to be seen how easy it will be for people to flip flop between the two systems.
“The special rule for pharmacies and meat processors is returning us to the old sales tax regime. Once you put a crack in the wall you’ll have loads of business groups coming up for exemptions.
“At the end of the day this will make the system more difficult. This goes right back to the old sales tax-exempt problems. The onus was on the vendor to ensure the person they were supplying had a genuine sales tax exemption.”
Chamber of Commerce and Industry chief executive Lyndon Rowe said the good thing about Labor’s proposal was that it was a “minor tweaking” and not roll back.
“That’s good because there is less chance of this making things more complicated,” Mr Rowe said.
“Administering the turnover tax could prove difficult.”
Mr Rowe described the Government’s proposal to allow small businesses to charge interest on overdue debt as “crazy”.
“That should be a business to business matter, not something the Government should become in-volved with,” he said.
“The risk of not getting paid is a normal commercial risk.
“The Chamber believes in free enterprise and it should be the Government’s role to facilitate that.”
