OYA Blog

It’s been 11 years since the Goods and Services Tax (GST) was introduced in Australia and, while the initial public panic has evaporated, debate continues over the fairness of the Howard Government’s ambitious tax reform. So let’s take a look at the basics of the GST.

The GST is a tax on both goods and services at the rate of 10%. It was introduced in July 2000 to replace a range of inefficient state taxes and broaden the existing wholesale sales tax system, which gave unfair tax advantage to suppliers of services.

Everyone in Australia is subject to GST – even churches and charities. There are only two legitimate ways to completely avoid it. One is not to buy anything and the other is to move overseas.

There are some goods and services that are GST-free. They include many basic foodstuffs, medical and educational services, disability services, some services provided by religious institutions and charities, transport, precious metals, duty-free items and grants of freehold land. Other items, such as financial services

and rental of residential premises, are exempt from GST because they are input-taxed – which means that no GST is applied to the selling price, however, the supplier of the input-taxed good or service is not entitled to claim back any GST (as an input-tax credit) on anything acquired to produce it. A private sale by an unregistered individual to another unregistered individual also escapes GST.

Whether you like it or hate it, GST is here to stay. It is highly unlikely any new government coming into power will reverse it. Once major reforms like this are introduced they usually prove too difficult to roll back.

 

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