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 to 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 would incur a GST, and which would be GST free, was still very much up in the air until recently, when the Federal Treasurer finally released a draft determination. With Councils expecting this information to have been released last November, this determination is now waiting on approval by the State and Territory Governments.
In January, Acting Leader of the Opposition, Simon Crean, slated the Government for this indecision. He said that Councils were unable to plan for the year ahead. Decisions on budgets, administrative arrangements, and even whether some services would still be viable, could not be made while it was unclear what services would be subject to the GST.
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 be considered for GST, was 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.
Councils being unsure as to which aspects of their operations will incur the new tax and which will not, has made preparation for The New Tax System, particularly the adequate training of staff, very difficult. Although the draft determination has provided some direction, a final decision on this matter must not be delayed any further.
