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Thursday, 21 June 2007
Page: 134

Senator MURRAY (4:55 PM) —The Tax Laws Amendment (Simplified GST Accounting) Bill 2007 amends the act known as the A New Tax System (Goods and Services Tax) Act 1999—otherwise known as the GST act—to assist in reducing the compliance costs for small business. This bill streamlines compliance for small business entities with a turnover of less than $2 million and reduces cost.

The bill seeks to extend the class of entities to which the simplified accounting methods can apply. These amendments allow the Commissioner of Taxation to determine simplified accounting methods in writing. These can be made for small businesses and other entities with an annual turnover of less than $2 million that make a mix of taxable and GST-free supplies or that acquire a mix of supplies that are taxable and GST free for the suppliers, known as mixed inputs. As at present, the commissioner can continue to determine simplified accounting methods for retailers and charities. There are precedents for this sort of treatment.

The compliance cost impact is minor. There will be minor transitional compliance costs for eligible businesses as they initially adopt the new simplified accounting methods. However, on an ongoing basis the simplified accounting methods are expected to reduce their compliance costs.

By extending the classes of people who can access this accounting method, the bill could theoretically open the system to some abuse and it will therefore need to be monitored. The measure does not apply to small business entities which work out their income at the end of the year and who do not have to produce a quarterly BAS. These measures do reduce very marginally the revenue raised through the GST.

This bill will be very popular with small business owners, especially those who dislike doing the full BAS, and it may have the effect of reducing some of the paperwork the ATO has to put up with. The Australian Democrats support this bill.