GST simplified accounting method research
GST simplified accounting methods were introduced to reduce the compliance burden for small food retailers with inadequate or non-existent point of sale equipment by making it easier to account for GST. They were introduced when GST was first implemented in 2000.
In 2011, we commissioned Chant Link & Associates to undertake independent research on the GST simplified accounting methods to evaluate:
- the current drivers for use
- how well the method was meeting the needs of small business
- whether the provisions should continue to be administered in their present form.
The research was conducted in two phases:
- Qualitative research - a combination of face to face and telephone interviews with 15 small food-related business owners and managers and eight tax agents. The key objective of these interviews was to explore the knowledge of and attitudes to the GST simplified accounting methods.
- Quantitative research - a telephone survey of 400 small food-related business owners and managers to profile users of the GST simplified accounting methods and to explore their level of understanding and attitudes towards the provision.
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- Business owners and managers were generally very positive about the importance of the GST simplified accounting methods to their business. They perceived that it provided an accurate estimate of GST payable on sales and purchases and was effective in saving them time. However, it was also apparent that there was considerable confusion about how to use it.
- Regardless of their level of knowledge and confidence in dealing with it, the majority of respondents were reluctant to consider changes to the method they were using.
- Tax agents generally did not want to see any substantial changes to it and felt it worked well as it was.
- It was evident that the nature of the industry (in terms of the cultural and language diversity of the people, competition, staff turnover, profitability etc) impacted on needs and expectations, attitudes to and knowledge of taxation, and ability to engage with and understand it.
- Many of the businesses surveyed had high staff turnover and low levels of profitability which limited their ability to implement any new point-of-sale system and to train staff in its use.
Findings from the research generally confirmed the importance to small business of the provision. We will retain support for the current provision largely because it provides an option for a simpler accounting method that reduces the cost of compliance for small business and is regarded as beneficial by some small businesses and their tax agents.
In response to the overall research findings we remain committed to ensuring small businesses understand how to use and correctly apply the provision. In support of this we have developed and initiated specific communication activities that aim to reduce the reported confusion about it, by educating business owners about which method is most appropriate to use.
In addition, we provide numerous information products such as Simplified GST accounting methods (NAT 3185), business activity statement instructions for each GST simplified accounting method, and business norms fact sheets for various industry types.
Further information about the GST simplified accounting methods can be obtained from the contact centre (13 28 66), through a written request for advice or through a small business advisory visit.
Small businesses are also encouraged to visit the small business support webpage for details regarding the range of assistance provided by us.
Detailed findings about the research conducted are provided in the report titled: A Research Report: GST and Simplified Accounting Methods.