GST hindering e-commerce development

E-commerce development is on the backburner as many users race for GST compliance by July 1, a federal government officer told Computerworld last week.

Phil Malone, e-commerce manager at the National Office for the Information Economy (NOIE), admitted GST implementation is hindering e-commerce work because the new tax is preoccupying some organisations.

Malone said the ideal solution is to combine GST implementation with e-commerce development, which the government is actively trying to promote with financial incentives announced in the recent Budget and in Australian Taxation Office (ATO) workshops.

The ATO's mission is to ensure all transactions with the private sector are online, allowing organisations to submit GST statements on a monthly basis, which will improve cash flow because tax credits can be processed more efficiently.

According to NOIE's new technologies manager, Steven Byrne, it is a question of management, not technology.

"E-commerce development is being neglected because of perceived complexities about calculating inputs and outputs and the overall process of being GST compliant, not because of the cost of technological applications," Byrne said.

"It's a conceptual difficulty, the job of getting one's head around the GST in the first instance.

"But we believe the GST is an e-commerce enabler and recent evidence supports this with the number of organisations going online to streamline tax requirements and to utilise financial incentives."

As part of the implementation process, it is mandatory for organisations with revenues of more than $20 million to be online for all ATO transactions. In the recent budget, for organisations earning less than $10 million, the government extended tax deductions for the cost of plant and equipment purchased before June 30, to be GST-ready.

Two years ago Byrne said the government estimated 10 per cent of the 2.6 million businesses eligible for an Australian Business Number (ABN) would use the ATO's online service.

"But there has been a response of more than 20 per cent; that's more than 500,000 businesses," he said.

NOIE is also providing a digital identity certificate with the ABN for use in a wide range of business-to-government and B2B transactions.

Byrne said these certificates are an important enabler of e-commerce and offer opportunities for wider use.

"Implementing digital identity certificates is a huge task - of Sydney Harbour Bridge proportions - for any business, but is the gateway for B2B development and quickens the government's broader e-commerce objectives to facilitate greater online participation.

Dr Paul Twomey, NOIE chief executive officer, cited the pharmaceutical industry as an example of successful B2B development. He said that industry's e-commerce project had reduced ordering costs by $340 million or 90 per cent. "Australian supermarkets have also reduced supply chain costs by up to $1 billion."

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