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Deductibility of Travel Expenses
October 8, 2001
Taxation of Expatriates
October 15, 2001
Deductibility of Travel Expenses
October 8, 2001
Taxation of Expatriates
October 15, 2001

Beazley’s Big BAS Bungle



Labor is opposed to the GST but now they want to run it. And they haven’t got a clue how it works.

Labor’s announcement today of proposed changes adds significant complications to the GST system. And what is more it can only work if businesses pay more GST than they are liable for!

Labor wants the Australian Tax Office to set ratios for all eligible companies and businesses. Companies can pay GST on a ratio to turnover.

If this amounts to less than the actual liability, then companies will choose it and open up a large revenue hole. But Labor says it has to be revenue neutral. It can only be revenue neutral if Labor can get an equal number of companies to overpay to make up for those that cherry pick the advantage.

Of course the ones that it needs to make overpayments will be the less sophisticated small businesses who will have to pay significant additional amounts. And the ratios will have to be set high enough to get them to pay the additional revenue. This is a whole new proposition for tax collection. You do not pay what you owe. You are forced to pay more than you owe with no annual reconciliation!

The ratio method Labor proposes could not be of any possible use to expanding or contracting businesses, businesses that change their buying or selling patterns, businesses that have bought or sold large capital items, new businesses, farmers with big income fluctuations, businesses changing their client bases.

Beazley’s BAS Flip Flop

Businesses do have to annually reconcile:-

what we’ll be able to do is to ensure that you can establish the rate at which in your turnover you’re paying effectively the GST and allowing you to acquit on a quarterly basis on that before a final reconciliation at the end of the year .

– Kim Beazley, ABC Radio Adelaide 2 Aug 2001

Businesses don’t have to annually reconcile:-

The ratio method will eliminate the need for quarterly and annual GST reconciliations.

– Kim Beazley, Press Release 12 October 2001

Beazley’s additional tax take

The ALP has also failed to explain to small business how their ratio’ method would apply to a rolled back tax base. The ratios to be used are those applicable to the current tax base. Applying these ratios after the tax base has been rolled back will mean over-collection from all companies affected by rollback. The ALP say ratios will be adjusted to take this into account. How could this occur? Only if there is a full annual reconciliation of tax payable on the rolled back base as against the tax payable on the original tax base is undertaken. This means that every time Labor rolls back the GST from a good or service small businesses will be forced to complete a full annual reconciliation to obtain a new ratio.

The ALP wants to hide these details from small business until after the election. Labor’s policy states that the new system will be designed after the election by a Committee.

Small business deserves better than this.

Mr Beazley has had 3 years to spell out a policy on rollback. The reason he doesn’t is that it can’t be done without overcollection, full annual reconciliation every time a business is affected by rollback, more forms and more complication.

12 October 2001