Australia's tax reporting system is to be radically simplified, according to Treasurer Peter Costello. He said last week that the government, in response to pressure from business and accounting groups, was proposing to make changes to the Business Activity Statement (BAS), which requires businesses to report monthly or quarterly to the tax office their turnover and tax collected.
The government is currently suffering from weak support in opinion polls and did not fare too well in state elections, so is looking at measures to win back support. Under the proposals, the government will allow businesses with annual sales under A$1m file the BAS only every 12 months.
Mr Costello is reported to have said that some changes could be in place as early as April. The Treasurer stated: 'We have some proposals which will radically simplify, but they still have to be put into effect and we're looking at the mechanisms to put them into effect.' He confirmed that the government would substantially simplify the compliance burden but urged caution saying: 'The small business community would say do it in a way which will give us certainty, don't have a rolling feast...and protect all of those people who have adjusted to the new system. A very large number of people have adjusted to the new system who want to know they will continue with certainty as well.'
At a tax meeting in Sydney at the end of last week, Prime Minister John Howard also asked small business leaders and accountants to support the changes to cut tax red tape. The tax meeting was due to discuss the technical issues about how changes can be made whilst keeping the integrity of the tax system as demanded by the Tax Office. The main problem is the paperwork burden imposed by Australia's new tax system. The BAS is a double-sided A4 page with 148 pages of intructions and deemed to be too complex.
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