Assistant Treasurer and Minister for Competition Policy and Consumer Affairs
3 December 2007 - 8 June 2009
Government Acts to Reduce GST Compliance Costs for Business
The Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, Chris Bowen MP, has asked the Board of Taxation to review the legal framework for the administration of the GST including Labor's BAS Easy.
"This review is another step towards the Government's goal to save business, particularly small business, time and money," Mr Bowen said.
"Simplifying the rules that govern how businesses meet their GST obligations, including calculating their GST liability, will reduce red tape and compliance costs for all businesses.
"I have asked the Board of Taxation to consult with stakeholders, including small and large businesses, professional bodies and State and Territory Governments, and to report back to me by the end of December 2008."
The focus of the review will be on:
- streamlining and improving the operation of the GST;
- reducing compliance costs; and
- removing anomalies.
"The review will not extend to either the rate of the GST or the scope of goods and services that are subject to GST. I have also asked the Board of Taxation to ensure that its recommendations are broadly revenue neutral," Mr Bowen said.
The Board of Taxation had before it a reference to review the application of the income tax self-assessment principles to other taxes administered by the Taxation Commissioner, including the GST.
The Board will instead undertake this review of the legal framework of the GST. The Board's findings on the GST may then inform any consideration of the application of the self-assessment principles to other taxes.
Further information about the Board of Taxation can be found at http://www.taxboard.gov.au.
The Hon Chris Bowen MP
Minister for Competition Policy and Consumer Affairs
Mr R F E Warburton AO
Board of Taxation
PARKES ACT 2600
Dear Mr Warburton
I am writing to request that the Board of Taxation undertake a review of the legal framework for the administration of the GST in line with the attached terms of reference and report to the Government by the end of December 2008. This will replace its current review of the application of the income tax self-assessment principles to other taxes administered by the Taxation Commissioner. The Board’s findings on the GST could later inform any consideration of the application of self assessment principles to other taxes.
The review should include an examination of the application to the GST of the rulings process, the period of review, the application of the general interest charge, and the Government’s BAS Easy proposal. The terms of reference also list a number of other aspects of the legal framework for the administration of the GST that I would like you to examine.
The intent of any recommended changes flowing from the review should be to reduce compliance costs, to streamline and improve the operation of the GST and remove any anomalies, while not undermining the integrity of the GST. The review should not extend to the rate of the GST or the scope and extent of the GST base. The Board should ensure that its recommendations are broadly revenue neutral.
I have written to state and territory Treasurers advising them that the reference currently before the Board will be amended to focus on the legal framework for the administration of the GST. I would encourage you to seek submissions or other input from the States and Territories and to ensure that the States and Territories are kept informed of the progress of the review.
There are a number of taxpayer disputes concerning the effectiveness of the Commissioner’s practice of applying the general interest charge for overpaid refunds from the date that a shortfall arises. If the Courts hand down an adverse judgment on any of these matters prior to the completion of the review, the Government may potentially need to consider legislative options prior to the submission of your report.
I request that the Board also consult widely with business and tax practitioners, as set out in the terms of reference.
Terms of Reference for
Consultation on Review of the Legal Framework for the Administration of GST
The Board of Taxation should consult with relevant stakeholders and report to the Government on the merits of possible changes to the legal framework for the administration of the goods and services tax. The intent of any possible changes should be to reduce compliance costs, to streamline and improve the operation of the GST and remove anomalies in the following areas:
Liabilities and entitlements – as set out in the Taxation Administration Act 1953 (Tax Administration Act)
- refunds of overpaid GST
- period of review of GST payable and refunds
- general interest charge
Adjustment and entity rules – as set out in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)
- adjustments to previously declared GST or input tax credits
- correcting GST mistakes
- tax law partnerships and general law partnerships
- GST grouping
- joint ventures
Accounting for GST – as set out in the GST Act
- attribution of GST and input tax credits and tax invoice requirements
- tax periods and accounting for GST and calculating GST obligations.
In pursuing the reference, the Board should ensure that its consultations and recommendations focus on the legal framework for the administration of the GST as set out in the Tax Administration Act and GST Act. Whilst the Board may consider related issues to the above categories consistent with its terms of reference, its work should not extend to the rate of the GST or the scope and extent of what goods and services are subject to the GST. The Board should also not examine questions of the Commissioner of Taxation's effectiveness in administering the GST law as these are subject to separate ongoing review by other statutory office holders.
The Board should have regard to the design features of the GST as a multistage value added tax and should also ensure that any possible changes do not undermine the integrity of the GST. In considering any changes to reduce compliance costs to streamline and improve the operation of the GST and remove anomalies, the Board should ensure that its recommendations are broadly revenue neutral. The Board should also consider the implications of any possible changes to GST administration provisions for other indirect taxes that currently share common tax administration provisions in the Tax Administration Act or the GST Act.
The Board should consult widely with business on the basis of a discussion paper and then undertake targeted consultation with affected taxpayers, including small and large businesses, professional bodies and State and Territory Governments. Regional representatives should also be included in the consultations. The Board should report to the Government by the end of December 2008 on the outcome of its consultations and its recommendations.