At the end of last year, the Australian Tax Office released a series of industry booklets to assist businesses and organisations as they prepare for the GST. Specific for Councils is the booklet titled, ‘Local Government and The New Tax System’. A copy of this has been forwarded to all Councils.
The booklet states that, under The New Tax System, Councils will be required to manage and comply with their GST obligations on the same basis as the private sector. However, it also reaffirms some of the taxes, fees and charges used by Local Government will fall outside the scope of the GST.
As to which Local Government services will incur a GST, and which will be GST free, is still very much up in the air. The booklet says this ‘list’ is to be determined by the Federal Treasurer. With Councils expecting this information to have be released last November, it appears now that the best they can expect is early February.
In January, Acting Leader of the Opposition, Simon Crean, slated the Government for this indecision. He said that Councils are unable to plan for the year ahead. Decisions on budgets, administrative arrangements, and even if some services will still be viable, cannot be made while it is unclear whether or not the GST will be imposed on each Council service.
Speaking at the ALGA National Assembly last December, GST expert and Partner with Pricewaterhouse Coopers, Tom Wilson, emphasised that being properly prepared, with all staff understanding that every transaction must considered for GST, is paramount.
One thing is clear from the booklet, if businesses or organisations fail to include GST in their pricing, then they are liable to pay the 10% broad based tax. Although it is the consumer that will bear the cost of the GST, the liability to pay the tax to the Australian Tax Office rests with the supplier not the consumer.
This situation, where Councils are not sure which aspects of their operations will incur the new tax and which will not, makes preparation for The New Tax System, particularly the adequate training of staff, very difficult. A final decision on this matter by the Federal Government must not be delayed any further.
