Tax

GST compliance costs Australian businesses $11,950 every year

Patrick Stafford /

One of the country’s leading accountancy bodies has complained Australian businesses are spending too much of their time and money in collecting GST, compared to other countries.

The outcry from the Institute of Chartered Accountants comes as the group released research late last year which shows Australian businesses spend 58% of their total compliance costs in collecting GST, compared to 41% in both Britain and Canada.

The findings come as the country continues to debate the role of GST, with states urging the federal government to broaden the tax base and even increase the base rate. That debate has fuelled much of the controversy over the GST-free import threshold.

ICA chief Paul Stacey told SmartCompany while the research demands further study, it reveals “a disturbing conclusion”.

“What we’re saying now is that if the collections cost is this high, then we need to find out the reasons why it is so. It’s a disproportionate amount.”

The findings come as part of a three-year report, with the Australian segment of the research conducted by Chris Evans of the University of New South Wales and Philip Lignier of the University of Tasmania.

The study found Australian businesses spend $11,950 per year to collect GST.

Stacey says while he can’t speculate as to why the collection costs are so high, he points out the burden is being placed on SMEs above all others.

“This is really the other side of the GST debate,” he says.

“At the moment, most of the focus has been on the revenue side to governments, and the arguments are that either the rate should be increased, or the base broadened to bring in more revenue.”

“The flip side to that is, who’s bringing in the costs? GST by design makes businesses unpaid tax collectors, and performing that job for the government, it costs money.”

GST has been a major issue among SMEs for some time. The ATO has been given extra money over the past few years to ensure GST compliance is a major priority.

More recently, states have been squabbling over increasing the GST base. One major target was the GST-free import threshold, although many businesses aren’t expecting the government to make any announcement until after this year’s federal election.

 

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Patrick Stafford

Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.

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