The Treasurer announced in the budget a package of taxation measures aimed at reducing compliance costs for small business and providing greater flexibility to taxpayers in managing their affairs. The package included three initiatives that will significantly reduce GST compliance costs for small businesses.

This bill amends the GST Act to give effect to these measures.

The first of the initiatives provides small businesses and non-profit bodies that are voluntarily registered for the GST the option to report and pay GST on an annual basis. Businesses that take up this option will be able to prepare and lodge an annual GST return at the same time as they prepare their annual income tax return. The business will make a single payment of any GST at the time they lodge their returns with the Commissioner of Taxation.

The second initiative provides businesses that have an annual turnover of $2 million or less the option to undertake annual apportionment of input tax credits for acquisitions used partly for non-business purposes. Those businesses will disregard for most acquisitions or importations their non-business use in determining the amount of input tax credit they can claim in their monthly or quarterly GST return. The business will then make a single adjustment after the end of the financial year in which they made the claim for the credit to account for the non-business use. Businesses that are also required to determine the extent of non-business use of acquisitions or importations for income tax return purposes will be able to use the same determination for GST purposes.

The third initiative further reduces compliance costs for small businesses by simplifying the election rules relating to the option to pay GST by instalments and to lodge an annual GST return. An eligible business will no longer be required to make and lodge an annual election with the Commissioner of Taxation. Once a valid election has been made it will remain in force until the business chooses to leave the instalment system or it is no longer eligible to apply the option.

Full details of the measures in this bill are contained in the explanatory memorandum.

I commend this bill.