AUSTRALIA: COVID-19 GST IMPLICATIONS
Options for reforming Goods and Services Tax (GST) in light of the COVID-19 pandemic
Due to Australia’s federation system of government, any changes to either the base or rate of GST requires the unanimous support of the federal and all six state governments. With the exception of the expansion of GST to inbound ‘business to consumer’ intangible supplies and low value goods, there has been practically no changes to the base on which GST is applied and there has been no change to the GST rate, set at 10%, since GST was implemented in 2000.
While the COVID-19 pandemic has not resulted in any immediate changes to Australia’s GST regime, the relative stability and efficiency of GST as a revenue raiser has led to growing calls for Australia’s relatively low rate of GST to be raised and for GST to be imposed on exempt and zero-rated supplies such as fresh food, education, health and certain financial supplies.
The expectation is that any GST reform would lead to the removal of inefficient and volatile taxes such as state stamp duties and payroll taxes and may also lead to income tax rate reductions. However, various options are currently being debated and it is likely that any reform will not be implemented in the short-term.
Taxation authority GST reviews to recommence
At the height of the COVID-19 pandemic, the Australian Taxation Office (ATO) paused much of its review and audit activities and diverted its resources towards the urgent delivery of significant economic stimulus measures.
As the bulk of the stimulus measures have now been rolled out, the ATO has announced that it will be recommencing its GST-related review and audit activities. Predominantly, these reviews are focussing on ensuring that the ATO has ‘justified trust’ in the people, processes and technology that businesses are using to comply with their GST obligations.
Source – RSM Global
AUSTRALIA – Update 11th May
ATO Offering to Backdate Applications of Deferred GST to 1 April 2020
The Australian Taxation Office (ATO) has issued a notice on the deferred GST scheme, which may assist importers during the COVID-19 period, including that applications of deferred GST may be backdated to 1 April 2020.
Deferring GST for importers
If you’re importing goods into Australia, using the deferred goods and services tax (GST) scheme may assist your business during the COVID-19 (novel coronavirus) period by helping with cash flow.
Deferring GST payments on taxable imports
The deferred GST scheme means deferring payment of GST on imports until the first activity statement is lodged after the goods are imported. We are offering to backdate applications of deferred GST to 1 April 2020.
This means, if you apply in May or June this change will take effect from 1 April 2020. You will need to lodge the monthly activity statements for April, May and June 2020. Usually this change must take place in the first month of the relevant quarter. GST monthly reporting gives you quicker access to any GST refunds you are entitled to.
Source Credit – Orbitax
AUSTRALIA – Update 5th May
NFP (not-for-profit): Adjusting GST due to COVID-19
Your NFP organisation may have had contracts cancelled or had to cancel sales or refund purchases due to the impact of COVID-19. As a result you may have to adjust GST.
Common examples of when to adjust GST include:
- a change in the price of a taxable sale
- a taxable sale is cancelled
If you adjust GST:
- it must have been reported in a previous activity statement, there’s no need to report an adjustment if the event occurs in your current reporting period
- check paid invoices to see if you paid GST, how much and when.
Make your adjustment:
- for the amount paid in each previously lodged activity statement – if you’re accounting for GST on a cash basis
- in the activity statement period you become aware of the adjustment – if you’re accounting for GST on an accruals basis.
Source Credit – ATO
AUSTRALIA – Update 28th April
Notice on Deferring GST for Importers
The Australian Taxation Office (ATO) has issued a notice on the deferred GST scheme, which may assist importers during the COVID-19 period.
Deferring GST for importers
If you’re importing goods into Australia, using the deferred GST scheme may assist your business during the COVID-19 period.
Deferring GST payments on taxable imports
If you are an importer, you may apply to use the deferred GST scheme, which defers the GST payable on imports until the first activity statement lodged after the goods are imported.
To get the most benefit take action in April.
If you move from quarterly to monthly GST reporting during April, you should be able to access the deferred GST scheme for imports shortly after lodging a successful GST deferral application. However, if you delay your request until May or June then GST deferral can’t start until 1 July.
GST monthly reporting will also give you quicker access to any GST refunds you are entitled to.
How to access the deferred GST scheme
To access the deferred GST scheme, follow these steps:
- Change your GST reporting from quarterly to monthly using your tax agent. If you already lodge monthly, go to step 3.
- Wait 24 hours for processing to occur.
- Apply for the deferred GST scheme – this must be done by the person authorised for tax purposes on the ATO’s system.
If you are successful you should be notified within 24 hours.
Note: It may take three days before Australian Border Force’s (ABF) systems recognises and processes imports through the deferred GST scheme.
Source Credit – Orbitax
AUSTRALIA – Update 24th April
ATO Releases ‘One Stop Shop’ for Essential Tax and Super Info on COVID-19 Stimulus Measures
The Australian Taxation Office (ATO) has updated its website with essential information about tax and superannuation changes that have now become law following the passage of the Government’s Economic Support Package through the Parliament.
Commissioner of Taxation Chris Jordan acknowledged that many people are being heavily affected by the challenging economic conditions created by the outbreak of COVID-19 and that the ATO is standing by ready to help where it can.
Mr Jordan also reminded the community of other options available to assist businesses impacted by COVID-19 in addition to the new measures announced by the Government.. Options available to assist businesses impacted by COVID-19 include:
- Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.
- Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to.
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilitieso Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
- Businesses wanting to utilise any of these options can contact ATO over the coming weeks. It is not necessary for businesses to contact us immediately.
- Employers will still need to meet their ongoing super guarantee obligations for their employees.
Source Credit – Orbitax
AUSTRALIA – Update 24th April
Deferring GST available for Australian importers
With the COVID-19 pandemic causing chaotic economic conditions, Australian importers have been encouraged to consider the ATO’s GST deferral scheme.
The Australian Taxation Office (ATO) offers a scheme for domestic importers whereby instead of paying GST on taxable imports upfront, you can defer payment until the first activity statement is lodged after the goods are imported.
To participate in the scheme, an importer must:
- have an ABN
- be registered for GST
- lodge activity statements monthly and online
- make activity statements payments electronically
- comply with customs regulations.
- Applications for the scheme can be completed online.
Source Credit – Trenchless
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