Changes to regulations covering Goods and Services Tax (GST) will allow a broader range of business structures to access the benefits of forming a GST group and simplify compliance.
The Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, said today the changes will reduce compliance costs for eligible businesses and be of particular benefit to small and medium businesses.
`The government has responded to representations from various industries seeking to streamline compliance," Senator Coonan said.
Senator Coonan said that in particular, more partnerships and trusts will be able to access the GST grouping arrangements under the new membership rules, including:
- partnerships that share common partners;
- fixed trusts that are members of the same 90% owned group; and
- trusts with common family members as beneficiaries.
The groups benefiting from these changes had seen similar streamlining available to other business structures, such as holding companies and their subsidiaries, and wanted the same efficiencies.
Senator Coonan said these changes will substantially reduce GST compliance costs for business structures that are eligible to form a GST group.
"Under the GST grouping rules, forming a GST group allows related entities to operate as though they are a single entity for many GST purposes," Senator Coonan said.
"For example, only one member of a GST group is responsible for GST payment and reporting obligations, and almost all intra-group transactions are excluded from the GST. This reduces cash flow implications associated with accounting for GST on transactions between related entities," Senator Coonan said.
"The changes were developed following consultation with industry and small business representatives and tax practitioners with a view to simplifying the GST process. Business structures in the primary production, law, accounting, property and financial services industries were considered in formulating the changes."
The changes to the GST grouping rules took affect from April 1, 2003.
The rules allowing certain business structures to group are optional, so entities that meet the membership requirements do not have to form a GST group and may continue to operate as separate entities for GST purposes.
Businesses that wish to form a GST group will need to ensure that they satisfy the membership requirements and apply to the ATO. Any enquiries regarding the changes to the GST grouping rules may be made by calling the ATO on 1300 130 902.