After months of pressure from small business lobbies and the opposition, the Australian Government finally climbed down yesterday over its contentious GST Business Activity Statement and announced simplified reporting rules for small businesses and investors.
Businesses with under $A2 million turnover, self-funded retirees and almost 500,000 small investors will be freed from much of the time-consuming and costly paperwork. People with investment income will not have to fill in an instalment activity statement. Another 1.5 million people, including sole traders, will send the Australian Taxation Office a cheque each quarter for the same amount paid in the previous quarter. The BAS form will be completed and adjustments made once a year, although the tax office will have the right to apply an 'uplift factor' to the previous quarterly payment in some circumstances.
Small business leaders welcomed the changes, but said that some concerns remained unanswered. Some said the changes created an artificial multi-tiered system with very different provisions for businesses of different sizes.
The National Farmers Federation on the other hand said it was completely satisfied - the alterations meant farmers could now spend more time in the paddock and less in the office.
Some commentators asked why the Government had put small traders through such a nightmare in the first place. The Goods and Services Tax had been generally accepted and had gone into operation quite smoothly, but the highly bureaucratic reporting systems that accompanied it had unnecessarily cost business billions of dollars in setting up quarterly reporting procedures that were now being abandoned.
The Government certainly hasn't done itself any political favours and has handed a publicity gift to its enemies. Opposition leader Kim Beazley pointed out that under the terrible old wholesale sales tax (WST), the Government collected $19 billion from 80,000 taxation outlets, and kept all of it, whereas the GST collects $50bn from one million unhappy taxpayers, only to refund $20bn of it for a net $30bn after endless form-filling. "This is grand-scale nuttiness," said Mr Beazley. As one opposition newspaper put it, the BAS is a Bloody Awful Shemozzle.
Although the Government has announced the broad outlines of its climbdown, there remains a lot of detail to fill in, including the design of the revised BAS and other related paperwork and systems. Accountants and business leaders who attended a meeting yesterday with senior Government figures said afterwards that the discussions were going in the right direction: “The Government had a framework in mind that was pretty similar to our wish list. They’re looking at the right issues."
Federal Treasurer Peter Costello had previously been reported as saying that what can be done to simplify the form will be done and, if possible, changes will be made before the April form is due.
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