GST weighs down small businesses

National Features
January 06, 2013

Compliance costs for GST are heavier for Australian businesses.

COLLECTING the GST costs Australian small businesses a much bigger amount than comparable overseas countries, new research has found.

Tax academics say the cost to Australian small businesses of GST compliance comprises 58 per cent of their total internal compliance costs. This compares with about 40 per cent for British, Canadian and South African small businesses.

Institute of Chartered Accountants tax counsel Paul Stacey says the findings raise big questions about why GST collection is so much more expensive in Australia.

“On average, it costs Australian small businesses $11,950 per year just to collect GST,” he says.

“We need to ensure that any future changes to tax policy, including the GST, do not have the effect of increasing this real dollar cost.”

Stacey says further research is needed, and there should also be a focus on Australia’s “overly prescriptive approach to tax invoices”.

“Also, the initial data in this research may have been distorted because here in Australia we report other tax liabilities, such as PAYG, with GST on a single BAS form.” This is not the case in the other countries surveyed.

The research also found that a larger proportion of Australian businesses are required to charge GST, because our GST registration threshold is significantly lower than South Africa and Britain.