Australian GST Administration Performance Published

Mary Swire, Tax-News.com, Hong Kong

24 February 2011

The Australian government has published its GST administration mid-year performance, which shows that GST revenue collection at December 31, 2010 was around 4% (just over AUD1bn) lower than the Budget 2010–11 forecast and 2.6% below the mid-year economic fiscal outlook (MYEFO).

However audit adjustments raised AUD1.5bn by December 17, which was well up on the same period in 2009–10; cases involving client contact were around 750,000 (more than five times the number in the same period in 2009–10); and administration costs are around 5% less than anticipated at this time of year. The report stresses that GST collectable debt is still being influenced by businesses operating in a tight fiscal environment.

The net GST cash outcome at December 31 was AUD22.8bn, including net Australian Customs and Border Protection Services collections of AUD1.56bn. This is 4.3% (or AUD1bn) below the Budget 2010–11 profile and 2.6% (or AUD612m) below the MYEFO profile. The gap between net GST accruals and cash collections was AUD770m. The most significant part of this gap relates to GST debt. The estimated total statement outcome for June 2010 to November 2010 activity statements, excluding GST collected by Customs and Border Protection Services, was AUD21.5bn.

As at November 30, GST administration expenditure totalled AUD253.2m, which is AUD14.4m or 5.4% less than the estimate for GST administration costs.

At November 30, the government estimated the total outstanding GST debt to be AUD4.66bn, with collectable GST debt estimated to be AUD3.26bn. Growth in GST collectable debt from June 30 to November 30 was 3.5% compared to 10.39% for the same period in the previous year.

The report said: “We continue to assist taxpayers who are willing to work with us through a range of small business assistance measures. However, we are taking firmer action against taxpayers who are either unwilling to engage or continually defaulting on arrangements. This increased level of firmer action has been recognized in the media”.

Measures implemented to reduce the level of collectable debt include the following:

• Modifying approval conditions for general interest charge (GIC) free payment arrangements. Taxpayers must agree to a direct debit or demonstrate ongoing viability;
• A stronger emphasis on payment in full and direct debits for payment arrangements;
• Introducing a risk-based approach for debt case actioning where negotiated treatment plans are based on taxpayers’ capacity to pay, and lodgment and payment history, leading to improved conversations with taxpayers;
• Focusing on aged debt (greater than two years old where expected collections are low) with dedicated resources applying firmer action or write-off;
• Developing a business viability assessment tool to help staff understand the viability of a business and work out the most appropriate action to take.
• Releasing a number of communication products including an eLink to tax agents highlighting the importance of honouring the terms of payment arrangements, including meeting current lodgment and payment obligations.

To November 30 2010, around 79,000 activity statement cases were referred to external collection agencies. Activity statement referrals accounted for 79% of the value of cases referred. More than 220,000 conversations with taxpayers using dialler technology have been initiated so far this year.

A more recent initiative, the Enhanced Debt Collection Project, has increased the focus on reducing aged debt, referring debt cases to external collection agencies and ensuring that firmer action is taken on cases that meet certain criteria. The government is confident that it is on track to achieve its full year targets.

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