GST

[JRoo]

Wisdom come with age grasshopper especially if you run your own business.
So, How old are you JRoo and how many businesses have you owned/run?

Obviously you aren't that old then since you were wrong about the GST.

 

[Eagle87]

It hurts business by the ridiculous compliance costs e.g. the ABN and the BAS statements. Hardly productive or good for business.

Bullshit.

Getting an ABN is free.

Filling in a BAS can be done automatically from your normal accounting records....

It's a substantially better system for business than the system it replaced.

One of the things that actually adds to complexity and cost is the various exemptions. If your concern is business compliance costs, scrap the exemptions

 

[Ratts of Tobruk]

Wisdom come with age grasshopper especially if you run your own business.
So, How old are you JRoo and how many businesses have you owned/run?

You had a fair call on the BAS Statements (Meds claims to be a financial guru, yet apparently considers doing BAS statements as having cost him nothing, because he did them himself - presumably he paid himself in his business so that would've been a cost; and anyone with a passing knoledge of financial terminology should understand what an 'opportunity cost' is), but JRoo's quote from budget.gov.au is all you need to suggest you are both right. It's in the final two paragraphs. Stamp duty wasn't completely removed. Whatever agreement you thought there was on payroll isn't in that final agreement - most likely, as JRoo says, because of the lessening of projected GST revenue when the Democrats got exemptions from Howard.

 

[Maggie5]

Bullshit.

Getting an ABN is free.

Filling in a BAS can be done automatically from your normal accounting records....

It's a substantially better system for business than the system it replaced.

One of the things that actually adds to complexity and cost is the various exemptions. If your concern is business compliance costs, scrap the exemptions

Not sure you can say it is easier. When you purchased a product that had sales tax, you paid it at the time of invoice and that was it.
Some small businesses still record things manually and it does take more time, further don't see how you can appropriate cost to exemptions.
I have worked for a number of small business that used to carry out their accounts, since the GST they now have to employ book-keepers or send to their accountant which has cost them more.
Really small business (mum and dads or up to 5 employees) are being totally ignored regarding costs to do business. It is not only about wages.

 

[greennick]

No. As with most Malaysian business people I deal with, he lives in Selangor/KL which has developed world status (and as such is classified as 1st world).

Of course if you had any idea at all you'd have known that.

That said, it hardly undermines the point. Making a profit in Australia is difficult. Business investing money here, from abroad, outside a couple of sectors dont see us as particularly attractive. Increasingly capital is being concentrated in Asia. At present our primary method of accessing that capital is by selling them all our residential property .... I guess thats our solution to our otherwise unattractive regime.




Sent from my iPad using Tapatalk HD

I know plenty of Malaysians that have moved here with their families and businesses, so I guess it isn't a problem for them all!

 

[greennick]

There were no adjustments to income tax when gst came in so why would there be when the rate inevitably goes up

Yes there were.

 

[greennick]

Not sure you can say it is easier. When you purchased a product that had sales tax, you paid it at the time of invoice and that was it.
Some small businesses still record things manually and it does take more time, further don't see how you can appropriate cost to exemptions.
I have worked for a number of small business that used to carry out their accounts, since the GST they now have to employ book-keepers or send to their accountant which has cost them more.
Really small business (mum and dads or up to 5 employees) are being totally ignored regarding costs to do business. It is not only about wages.

Come on, how hard is it to record your GST paid when you're entering your invoices? Programs like myob pretty much do it for you.

If you can't use myob, you get a bookkeeper. If this is the case, you should have had one prior to the GST anyway, as how else were you doing your tax and keeping track of the performance of your business.

 

[Ratts of Tobruk]

I think there would be a substantial amount of people who did their own accounting prior to the GST, who had to get software or a bookkeeper afterwards. It is not as simple as working out profit and loss to work out tax you have to pay. As stated earlier GST is applied inconsistently and within one job some items may have it, while others may not. There was also the problem of learning you should've charge GST and didn't. Or if you didn't have a high enough turnover, you shouldn't have charged it. Not to mention that when it first came in there were a whole bunch of teething problems and the red tape was even more substantial (who'd have thought that all political parties don't get policies correct as per every ramification first time out of the gate?). That's why I liked the Labor proposal for BAS to be done once a year for small business. Without getting into the pros and cons of exemptions, it made the workload much lower for a lot of people (same as when they raised the tax-free threshold to $18,000 for individuals).

 

[The_Reaper]

I know plenty of Malaysians that have moved here with their families and businesses, so I guess it isn't a problem for them all!

Half of Winthrop for instance.

 

[tandino]

Doing a BAS once a year doesn't solve any problems. In fact, it makes compliance 4 x harder for those who run businesses and still keep receipts in shoeboxes.

You can not run a business in this day and age without bookkeeping software. But even if you are using an old paper ledger, as long as your bookkeeping standards are high, I can't see it taking any more than half an hour realistically to complete a BAS for a small/medium sized business.

Tax policy shouldn't have to accommodate those businesses who refused to make the move into the 1980's

 

[Ratts of Tobruk]

Doing a BAS once a year doesn't solve any problems. In fact, it makes compliance 4 x harder for those who run businesses and still keep receipts in shoeboxes.

Doing something 4x less makes it 4x harder - gotcha! ...Or maybe you just want to attack that idea because it was the ALP's idea? Unless you think keeping receipts in a box (or maybe invoices in a folder on your computer because it's 2014) is particularly arduous?

 

[tandino]

Doing something 4x less makes it 4x harder - gotcha! ...Or maybe you just want to attack that idea because it was the ALP's idea? Unless you think keeping receipts in a box (or maybe invoices in a folder on your computer because it's 2014) is particularly arduous?

For those who find doing a quarterly BAS difficult, having to do four quarters worth of statements at once will be significantly more difficult.

For those who find it not too difficult, realistically they may save 2 hours of compliance work a year.

It's not a real relief from the burden of BAS.

The downside for Government is the obvious risks in having their GST revenue tied up in small business for longer.

 

[greennick]

Doing something 4x less makes it 4x harder - gotcha! ...Or maybe you just want to attack that idea because it was the ALP's idea? Unless you think keeping receipts in a box (or maybe invoices in a folder on your computer because it's 2014) is particularly arduous?

I think his point was that if you only do your accounting once a year, it is a mammoth task. It is something that you need to keep on top of.

 

[greennick]

I think there would be a substantial amount of people who did their own accounting prior to the GST, who had to get software or a bookkeeper afterwards. It is not as simple as working out profit and loss to work out tax you have to pay. As stated earlier GST is applied inconsistently and within one job some items may have it, while others may not. There was also the problem of learning you should've charge GST and didn't. Or if you didn't have a high enough turnover, you shouldn't have charged it. Not to mention that when it first came in there were a whole bunch of teething problems and the red tape was even more substantial (who'd have thought that all political parties don't get policies correct as per every ramification first time out of the gate?). That's why I liked the Labor proposal for BAS to be done once a year for small business. Without getting into the pros and cons of exemptions, it made the workload much lower for a lot of people (same as when they raised the tax-free threshold to $18,000 for individuals).

How did raising the tax free threshold do much at all to individuals having to prepare tax returns? Most people on low salaries still need to do a tax return as lumpy part time wages will be over the $350 a week level often, even if the average is less keeping them under the 18k amount. They'll want to get this tax back I'm sure.

 

[JRoo]

I don't have an issue with paying our BAS quarterly or even paying my companies superannuation obligations as we simply transfer the money to the designated fund & email a distribution statement and job complete and takes 30 minutes per month.

 

[DrKrieger]

I might just be cynical, but I think that if the GST were removed, we wouldn't see a corresponding drop in price, everything would still cost the same and the retailers would just pocket more.

I'm still of the opinion that removing individual income tax combined with taxing religions (but not their charitable arms) and maybe a slight increase to the GST would have a beneficial effect.

You would still be able to have centrelink payments for those that need it, but for everyone who is now taking home a good amount more money as they aren't having income taxed, they now spend more as they can afford to. I would expect that this would net more tax per annum than the current system.

In saying all that though, I can appreciate it would have huge ramifications that may render it impractical, such as how do people pay back hecs debt.

 

[Ratts of Tobruk]

I think his point was that if you only do your accounting once a year, it is a mammoth task. It is something that you need to keep on top of.

I understood the point, but still have a problem with the ridiculous idea that it would be 4x harder to do BAS once a year as compared to 4 times a year. It was rhetoric and silly. Ask yourself or any person if they would want to do their tax returns 4 times a year or once, and I think the vast majority would say once a year saves time. None would say doing it once is 4x harder.

There was a slight drop in revenue that was considered as part of the proposal - depending on how a business stores its GST, a fair chunk of the loss in revenue to the govt would've been gained by small business. Not a bad thing.

How did raising the tax free threshold do much at all to individuals having to prepare tax returns? Most people on low salaries still need to do a tax return as lumpy part time wages will be over the $350 a week level often, even if the average is less keeping them under the 18k amount. They'll want to get this tax back I'm sure.

Your tax is worked out on aggregate, not on the assumption you will get paid that same amount for the entire year. If you have one job then you tick the tax-free threshold box. If you have multiple jobs and tick the box for all of them you run the risk of owing tax at tax return time. The estimate was there would be 1,000,000 less tax returns with the 18K threshold. I think they are also still going to do the automatic tax return option, whereby the ATO will send out an estimate and you can just say 'yep' and accept it if you don't want to go through the whole process.

 

[greennick]

Your tax is worked out on aggregate, not on the assumption you will get paid that same amount for the entire year. If you have one job then you tick the tax-free threshold box. If you have multiple jobs and tick the box for all of them you run the risk of owing tax at tax return time. The estimate was there would be 1,000,000 less tax returns with the 18K threshold. I think they are also still going to do the automatic tax return option, whereby the ATO will send out an estimate and you can just say 'yep' and accept it if you don't want to go through the whole process.

This is incorrect. Your tax is worked out as if what you earned in the period is your taxable income for the whole year.

This 18k change really only benefited those on consistently very small incomes. Even as a student I would still have had to do a tax return as I worked more the holidays than during exam time. It would not surprise me if that "estimate" of one million less tax returns turned out to not occur, though no doubt it was in the hundreds of thousands, so still made sense. Taking the tax up front and then giving it back with the low income tax rebate was inefficient.

As an aside, the reason the ATO wants short returns is people then miss out on deductions. They still get all your income. Sneaky buggers. Though it doesn't matter if you don't pay any tax before deductions (ie, earn less than 18k). With deductions, your income could be well over 25k and still be tax free, so for anyone over 18k, you don't want to be doing the short return.

 

[Maggie5]

Come on, how hard is it to record your GST paid when you're entering your invoices? Programs like myob pretty much do it for you.

If you can't use myob, you get a bookkeeper. If this is the case, you should have had one prior to the GST anyway, as how else were you doing your tax and keeping track of the performance of your business.

Did you read my post? I said that they now employ a book-keeper. I know that they can also get their accountant to do it or purchases MYOB or Reckon or similar.
My point was it is now more expensive for than for previous tax system. Paying sales tax (on invoice) was a breeze and didn't need any further recording.

 

[Ratts of Tobruk]

This is incorrect. Your tax is worked out as if what you earned in the period is your taxable income for the whole year.

No, it's really not. I don't know if you have ever been paid a wage/salary, but if you are, you are doing it wrong.

As an aside, the reason the ATO wants short returns is people then miss out on deductions. They still get all your income. Sneaky buggers. Though it doesn't matter if you don't pay any tax before deductions (ie, earn less than 18k). With deductions, your income could be well over 25k and still be tax free, so for anyone over 18k, you don't want to be doing the short return.

You can get $7K of deductions from $25K? How? I'm not surprised you think the ATO is trying to diddle people if you think everyone can regularly cut a quarter of their income off their tax bill and just don't through ignorance. It's good to have your position on record, though, as it shows both how much people whinge about their tax rate isn't actually related to their tax rate, and also reminds me of how much the well-off and/or educated 'minimise' their tax paying, while the poor do not. ...If only we had a higher taxfree threshold so these people weren't ***ed over by the rest of the 'taxpaying' public.

 

[Pessimistic]

I might just be cynical, but I think that if the GST were removed, we wouldn't see a corresponding drop in price, everything would still cost the same and the retailers would just pocket more.

I'm still of the opinion that removing individual income tax combined with taxing religions (but not their charitable arms) and maybe a slight increase to the GST would have a beneficial effect.

You would still be able to have centrelink payments for those that need it, but for everyone who is now taking home a good amount more money as they aren't having income taxed, they now spend more as they can afford to. I would expect that this would net more tax per annum than the current system.

In saying all that though, I can appreciate it would have huge ramifications that may render it impractical, such as how do people pay back hecs debt.

Would you tax the afl and similar ?

 

[sherb]

As an aside, the reason the ATO wants short returns is people then miss out on deductions. They still get all your income. Sneaky buggers. Though it doesn't matter if you don't pay any tax before deductions (ie, earn less than 18k). With deductions, your income could be well over 25k and still be tax free, so for anyone over 18k, you don't want to be doing the short return.

The short return still features the major deduction labels.

 

[DrKrieger]

Would you tax the afl and similar ?

I may be about to look like a fool, but I would see the AFL (and the clubs as well) as a business. So things like merchandise would have a GST component, tickets to a game and club memberships would have a GST component.

As I mentioned before, it's a very rough framework of an idea that is, for all realistic purposes, irrelevant, as I won't ever be in a position to change the rules, and the only part of it I'm 100% certain about is that I've missed things which would complicate how it works in my head.

But the basic idea I have is that instead of taxing income, then having deductions etc, people now get the (currently) taxed component of their pay in their pocket as well, which allows them to buy more/live more comfortably, and even if you didn't raise the GST%, you would have more money being spent on things, which means more tax dollars going back to the government. Obviously buying stuff online from overseas would present a problem, that's just one of the ones I can think of off the top of my head.

 

[greennick]

No, it's really not. I don't know if you have ever been paid a wage/salary, but if you are, you are doing it wrong.

As noted in my post, I have, and I ended up with significant tax returns each year due to my varied income (well, significant for me at the time, it was like forced savings). Further, the same happens to me now when I have performance bonuses, which are taxed as if my salary was much higher than it is. If you look at the tax office website, it sets out that PAYE is calculated per pay period following set scales based on how much you earn in each pay period (usually per week for casual workers, however there are tables for fortnightly, monthly, etc). Essentially, it annualises your pay for that period, works out the tax payable if you earned that for the whole year, and then divides the tax payable by the number of periods in the year to calculate how much should be withheld.

How do you think your PAYE tax withheld is calculated?

You can get $7K of deductions from $25K? How? I'm not surprised you think the ATO is trying to diddle people if you think everyone can regularly cut a quarter of their income off their tax bill and just don't through ignorance.

Never said everyone could, but with FTA and FTB, car deductions (great deduction for me when I was a pizza delivery driver, worth about 2.3k pa), computer, school fees, etc, they add up quickly. Deductions often relate less to your income, but more to your expenditure.

It's good to have your position on record, though, as it shows both how much people whinge about their tax rate isn't actually related to their tax rate, and also reminds me of how much the well-off and/or educated 'minimise' their tax paying, while the poor do not. ...If only we had a higher taxfree threshold so these people weren't ***ed over by the rest of the 'taxpaying' public.

I don't think I whinge about my tax rate, I believe in a progressive taxation system. While I believe we have too many deductions now, I still think everyone should claim whatever deductions they can when they are in place. The correct amount of tax to pay is as little as legally possible. I was poor and minimising my tax and I know of many others that did the same, so I don't think this is a poor vs rich thing. Sure rich people may have a higher capability to do this, however most deductions are limited. As you touched on, it is probably an education thing, but how is it my fault that some people don't go to H&R Block and get their taxes done for $99 if they don't understand the tax system?

 

[Eagle87]

Not sure you can say it is easier. When you purchased a product that had sales tax, you paid it at the time of invoice and that was it.
Some small businesses still record things manually and it does take more time, further don't see how you can appropriate cost to exemptions.
I have worked for a number of small business that used to carry out their accounts, since the GST they now have to employ book-keepers or send to their accountant which has cost them more.
Really small business (mum and dads or up to 5 employees) are being totally ignored regarding costs to do business. It is not only about wages.

A. I didn't say easier, I said better for business.

B. It's better because Sales Tax was complex; added cost at various stages and also had exemptions which required complex sales tax rebate/refund claims ...

C. Any small business recording manually is dumb. Clear enough?
There is no reason to record manually and it's grossly inefficient. It doesn't allow for proper business management in most cases either. I'm sure some people clung to horses well after it was obvious cars were taking over

D. The issue of small business compliance costs is real because of over-regulation in a range of areas. But blaming GST is a bit rich. Anyone that can't extract quarterly gross data from a system 28 days after quarter end has inadequate financial systems.