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GST Adviser Survey 2010

GST ten years on – Reinventing the wheel?


Deloitte | GST 10 years onThis year the GST adviser survey coincides with the tenth year anniversary of the introduction of GST in Australia. In addition to looking at trends developing from the 2006 and 2008 surveys, we also wanted to understand views on the state of the GST system ten years on.

A review of the commentary around the tenth year anniversary of GST points to the conclusion that most consider it to be a success story. Most of the commentary however is from external advisers and academics. This survey tests the views of the in-house advisers in Australia’s largest taxpayers, the people with most experience in dealing with GST on a day to day basis.

Executive summary

Call for a review of GST: Ten years on and after the Board of Taxation review, large business is calling for a further review of the GST system. An overwhelming 92% of respondents stated that a further review of the GST system was needed. Of those, 28% stated that it should be a wholesale review. The next opportunity to review GST is likely to be the forthcoming 2011 Tax Summit, but the big question is will GST be included

Why do we need a review? Almost half of respondents stated that they believe the Australian GST system is more complex than other GST/VAT and only 9% thought less complex. Half identified the number of basic GST concepts still being grey areas as their biggest disappointment with the GST system ten years on. 2/3rds believe there will be more challenge to the GST law over the next ten years. The message is clear – ten years on and there is a lot of uncertainty around basic GST concepts.

Lack of expertise in ATO: 32% reported lack of GST expertise in the ATO as their biggest disappointment with the GST system ten years on. 1/3rd of respondents stated that the quality of advice from the ATO over the past ten years was poor or very poor. Worryingly for the Tax Office, of those respondents only 6% stated that the quality had improved over the past ten years. It should be said that this may also be a reflection of the complexity of the Australian GST legislation.

ATO resources: The majority in the private sector believe that the ATO has not had sufficient resources allocated to GST as opposed to other taxes over the past ten years.

ATO relationship: It seems that the ATO continues to be seen as accessible with large business reporting a good understanding of the ATO structure. However, the same is not true in reverse with 59% of respondents stating that the ATO does not understand their business ten years on. Awareness of the Annual Compliance Arrangement has increased since 2008 although 55% still see no value in this. Of those who do see value, half said it is mainly ‘for show’.

Risk profile of GST coming out of the GFC: Australia bucks the trend globally with the majority of respondents reporting that GST risk to their business has remained the same over the past 12 months and only 22% of the view it has increased. This contrasts to the results from recent surveys of global and Asia Pac in-house advisers where 40% and 48% respectively reported that the GST risk had increased.

Governance and tax risk management: Ten years on and approximately half report that they have a documented tax strategy, and half report they do not. A similar result arose in respect of tax risk registers, with just under half reporting they did not have one. These findings come at a time when the ATO has just announced that it is to adopt a new Risk Differentiation Model for GST, applying risk ratings to large business similar to Income Tax.

Cash flow strategies: Most businesses have considered cash flow strategies around indirect tax. Of those who have, the perception of merit is mixed with 55% rating the impact as significant and 45% as not significant. However, excluding government entities the number increases to 62% rating as significant. This may be due to the low rate of GST in Australia.

Impact of data analytics and technology: The ATO appears to be succeeding in pushing its data analytics agenda with 2/3rds reporting that data analytics will significantly change the way things are done by the ATO. Interestingly, when asked about the impact data analytics would have on their own GST compliance and planning only 1/3rd thought it would be significant. This begs the question, why the difference in response?

Succession planning: A worrying trend from the 2006 through to the 2010 surveys is the age profile of the in-house advisers dealing with GST. The percentage of respondents over the age of 50 increases and the respondents under the age of 30 decreases. This may simply suggest that the survey invitation did not reach the younger in-house audience. However, with our knowledge of the market we believe there is an issue for some businesses around succession planning.

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