The GST will be implemented in just under 11 months. This is enough time for Councils to be ready if, but only if, preparations start immediately, according to Pat McCarthy Director of Gadens Accounting.
Councils will be in a totally new regime without tax exemptions they have previously been allowed. Addressing delegates in a special finance session of the of the IMM (NSW Division) Annual Conference, he said the first thing Councils need to do is form GST teams within their Councils, as they did for Y2K.
Once that team is formed they should then start planning for July 2000 immediately. The teams need to identify the issues applying to their operations, they need to identify their income sources and examine all contracts.
“Implementation of the GST will impact on Local Government operations as much, if not more, than Y2K,” Pat McCarthy warned. “Without adequate preparation many Councils could find themselves out of pocket. Councils must make sure their business operations are revenue neutral.
Pat warned about ‘GST leakage’. “Councils are no longer in a regime of exemptions,” he said. “Because they deliver many services free of charge, but must pay for inputs they need to make sure their business operations are revenue neutral.
“It is most important that Councils have the ability to track input tax credits so they can claim back everything they have paid,” he said. “If you do not properly track input tax credits you cannot claim them back.”
Pat said he is concerned that many Council staff still only have a basic understanding of the issues. “For instance, many do not understand that the GST is not a statutory ‘add on’ to prices” he said.
For further information contact Pat McCarthy, telephone (02) 9931 4999.
