Businesses failing to attain full GST compliance before July 1 risk several negative outcomes, including professional ostracism, warns Compaq tax and treasury manager Andrew Watson.
With the new tax regime now less than one month away, the risk of isolation from taxation-wary business partners, an effective tax increase of a further 10 per cent, and ACCC-enforceable non-compliance fines of up to $10 million, are the three major risks Watson expects will jolt most unprepared companies into GST action.
Watson said small-to-medium and large enterprises that were unable to prove by documentation the amount of GST embedded in their expenditures would be forced to pay GST on top of those expenditures -- effectively doubling their tax output.
Furthermore, he explained, a company's business partners would be likely to read from invoices whether or not that company had itemised GST separately from other expenditures. Companies who fail to itemise GST separately will prove unattractive as business partners due to inevitable billing complications, Watson said.
Nevertheless, Watson dismissed the blanket advice of large-scale software refurbishment frequently heard by small businesses. "You don't have to get special software," he said. "You don't have to get computerised."
However, he pointed out that high levels of automation could significantly smooth out some time-consuming practices inherent in the new tax system, such as the aforementioned invoicing issues.
Fortunately for most small-to-medium enterprises, he said, "it's not too late" to start preparing for the new tax. For many of Australia's smaller companies, GST compliance may only mean "adding another column in the cash book", he said.
Business processes, systems, and pricing are the key areas in need of upgrading, he said.