Sam Morris, Senior Manager - Tax Consulting

2010 has marked the 10th anniversary of the Goods & Services Tax in Australia.

Yet despite being introduced on the back of a number of similar consumption tax systems around the world, the Australian GST regime has undoubtedly experienced a considerable amount of change and controversy in its relatively short life.

The prominent ‘Henry Review' which stole headlines for little more than the timing of its publication around the Federal Election was specifically commissioned to consider how we ‘Shape Australia's Future
Tax System' yet denied Ken Henry the opportunity to consider the GST. Ironically, unlike income taxes, the GST affects every single Australian, even children buying lollies at the local milk bar so why exclude discussing it?

There is now extensive lobbying from the SME arena and professional bodies to address GST reform at the tax summit in 2011 which will examine the recommendations arising from the Henry Review.

On 10 December 2010 a Press Release announced the Gillard Government's commitment to further reforms of the margin scheme whereby taxpayers are allowed an alternative means of calculating GST on property transactions. Legislative changes are due to apply from 1 July 2012 and it remains to be seen whether further reforms will simplify the current system or add to the confusion in this space.

Much press coverage has been seen in recent weeks concerning cross-border transactions and the ability of Australian businesses to be competitive in global markets, particularly with regards to consumers purchasing goods online through offshore suppliers. A loophole currently exists whereby goods imported under the value of $1,000 do not attract GST. The debate has been further exacerbated by the strength of the Australian dollar and the surge in customers purchasing goods online.

Myer quickly announced their plan to commence selling goods online and distributing directly from a warehousing acility in China to the Australian customer and Harvey Norman executive chairman Gerry Harvey has called for the Federal Government to dispense with the $1,000 threshold altogether.

The debate continues and it remains to be seen whether we will all start ordering our new jocks and socks online from China rather than popping down to the local shopping centre but maybe this will apply the appropriate pressure in Canberra to commit to reviewing the GST in detail in the New Year.

It will be interesting to see if this very public debate around online goods will act as a useful smokescreen to enable further changes to the GST legislation to occur whilst the spotlight is firmly shining elsewhere.

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