Businesses able to reduce costs of raising funds by claiming additional GSTDOWNLOAD
Tuesday 11 May 2010: Professional services firm, Deloitte, has welcomed the Federal Government’s budget measure to increase the financial acquisition threshold (FAT) from $50,000 to $150,000 allowing many additional businesses to recover GST that would otherwise have been lost.
Currently, a business cannot claim GST on costs relating to financial transactions such as share raisings where the annual GST expenditure on such costs exceeds $50,000.
Mr Jonathan Paul, Deloitte Indirect Taxes partner, said the new measures will reduce the cost of raising funds for smaller businesses.”
In addition to increasing the FAT threshold, GST changes that have been proposed include:
“The potential exclusion of bank deposit accounts from the borrowing concession will be of interest to the banking community and would seem at odds with Board of Taxation recommendations (and also ATO comments in Draft GST Ruling GSTR 2009/D1),” Mr Paul said.
“Depending upon how the proposals are implemented, there could be a detrimental impact on a financial institution’s ability to recover GST incurred.”
“The Government has indicated it will maintain the current design of the GST financial supply provisions, but it will seek to clarify the operation of the legislation and reduce compliance and administrative costs by making a number of changes”.
These changes are not proposed to take effect until 1 July 2012 and no doubt there will be further consultation prior to this.