I don’t know why regulation and its failures annoy me so much. It’s not healthy – because there’s a lot of bad regulation about and only so much nervous energy to go round. Anyway, I got my GST installment advice today. The story of the GST has been a sad farce from the beginning. You remember all that hullabaloo about how bureaucratic the BAS was? It wasn’t that difficult to fill out just incredibly unnecessarily so.
Where (I believe) some countries require you to fill out two boxes GST collected and GST paid and pay the difference as tax, the original BAS required about fourteen fields to be filled in, including items like G13 “Acquisitions for making input taxed sales and income and other supplies” and G14 “Acquisitions with no GST in the price”. It’s not that it’s so hard to collect these numbers. But you don’t normally, and they’re unnecessary for calculating tax payable.
Now knowing the magnitude of these figures for every business in the country may have satisfied the idle curiosity of those in the Tax Office, but it does very little else. If the numbers are needed for statistical or for enforcement purposes then that can be done on some sampled basis.
The political blow up that was caused was the only political storm that I can think of about red tape. The Government was really quite worried about it. They could have said to the bureaucrats “stuff you, we’ve got elections to win, give us a two box form. GST collected minus GST paid equals GST owing. And if you have any other data needs, get them by sampling and specific compliance audits.” (This was a government elected on a platform of halving red tape!).
But despite no great fondness for bureaucrats, they couldn’t even manage that. The new form contains various bits and pieces that are unnecessary and can be quite a pain. For instance most businesses will want to separate out capital and non-capital purchases, but need that be done each time a BAS is supplied? Again, it’s not such a big deal, but it’s unnecessary. The formula is GST owing equals GST collected minus GST paid that should be all you need, with additional information appearing in (generally) annual tax returns as appropriate.
One of the things that really irked me is that one couldn’t simply pay in installments without doing any calculations and then make up the difference with a reconciliation at the end of the year. Of course like the old provisional tax one can leave this to self assessment with penalties designed to prevent interest free loans from the tax office. It’s all pretty basic stuff.
Finally an installment method came in, but remained unavailable to any business that received GST refunds (I think in any quarter of the previous year. Tough luck if that was you. Of course it’s not hard to work out a rationale for this the Government could have been forking out money to people who then shot through. But it’s also not hard to work out that getting people to fill in forms isn’t exactly much of a safeguard against milking the system. And if that’s the problem there are ways of addressing it without preventing all the people in a whole class making use of the installment method.
When I finally got onto the installment method it was marvelous. Just pay up and reconcile each year. Then it turned out that that wasn’t the game at all. On the first BAS each year you had to elect the installment method and if you didn’t you irrevocably defaulted back to filling in BASs for a year.
Such was my luck last year. Reading all the gobbledygook from the ATO quickly I imagined silly me that if I was on the installment method, I’d stay on it until there was a good reason to take me off it.
My quarterly installment of three pages of gumph from the ATO now reveals that there’s a terrific new development.
In the past you had to re-elect the GST installment option each year when you lodged your activity statement for the first quarter of the year. From this year onward you will not have to re-elect the GST installment option. As long as you satisfy the eligibility requirements, we will send you an installment notice for each quarter, including quarter one, and you simply need to pay the amount shown by the due date.
Source: Australian Taxation Office
Almost commonsensical really. Makes you wonder why it took five years to think of it. Still you can’t do this if you’re in a net GST refund position or if you’re turnover is more than $2 million. I can understand their point fo view. If we let just anyone use the system, well then – just about anyone might use it. And then where would we be?