The Treasurer today announced that a new GST simplified accounting method (SAM) for restaurants, cafes and caterers would be available from 1 October 2006 to make it easier for these businesses to meet their GST obligations and reduce their compliance costs.
The Commissioner of Taxation agreed to extend the simplified accounting arrangements to restaurants, cafes and caterers in response to industry representations to the Government and in line with recommendation 5.37 of the Banks Taskforce.
As a result of the new arrangements, developed in close consultation with industry, more than 30,000 restaurants, cafes and caterers are expected to have the option of using a formula to calculate their entitlement to GST credits. This means they will no longer need to identify and record the GST credits on each purchase.
This outcome reflects the Government’s desire to work collaboratively to design effective tax measures.
Businesses with an annual turnover of up to $2million will be eligible for the SAM. This is consistent with the Treasurer’s 2006-07 Federal Budget announcement that the Government would increase the eligibility threshold for access to a number of small business concessions (including the GST cash accounting option) from $1million to $2million.
This SAM complements other initiatives designed to reduce GST compliance costs. For example, businesses that are voluntarily registered for GST have the option of reporting and paying GST on an annual basis. Another example is where eligible taxpayers pay GST by instalments each quarter on the basis of an estimate of their GST liability. They only need to calculate GST once a year when they fill out their annual GST return.
Further information on the new SAM can be found at www.ato.gov.au