GST: whole of organisation approach vital
According to Pat McCarthy, Director of Gadens Accounting, for Councils to ensure they are revenue neutral, following the introduction of the GST next year, they need to take a whole of organisation approach.
"It is vital that everyone in Council who has anything to do with the supply or acquisition of a good or service is aware of how the GST will impact on every transaction undertaken," he said. Gadens Accounting is currently working with more than 30 Councils assisting them to prepare their staff for the tax changes.
"Our research shows that, for a business or Council, as little as 15% leakage of the GST flowing through an organisation could result in a 40% reduction in profit," Pat McCarthy said. "GST is not merely an issue for the finance and IT sections. All staff need to know, when they are purchasing goods and services, which are GST free and which are taxable, to claim back inputs.
"At the same time, on the sales side, where a GST applies to services, charges must be increased to cover this. For example, if Library subscriptions are not increased this would create GST leakage."
Although Councils will receive a larger refund than the GST they pay, Pat McCarthy said they need to be prepared for a cashflow drain if they pay suppliers before the claims can be made.
"Councils with a turnover of less than $20 million can lodge quarterly GST returns," he said. "However, they can also opt to do this monthly, similar to organisations with a turnover of over $20 million, which I would encourage, as they will then receive their refunds sooner."
Pat McCarthy stresses that the GST is just one element in the Tax Reform Package, and only through training and education will all staff be ready for the changes.
For further information contact Pat McCarthy, telephone (02) 9931 4818