“GST could be imposed on financial services,” says Professor Michael Walpole, the Deputy Head of the School of Taxation and Business Law at the UNSW Australia Business School. “There might be problems in implementing it, but with the current spotlight on GST, it’s one issue that could be addressed and raise revenue.”
GST was specifically excluded from Australia’s Future Tax System Review (also known as the Henry Review) in 2009 however he says, “it was pleasing to find that the review panel ignored this advice and did indeed discuss the consumption tax. One of the proposals it floated was a ‘subtraction method’ cash flow tax, and combined this with a financial services tax.”
Professor Walpole says it is now time to revisit this aspect of the GST, and his paper to be presented at the conference will look at how it might be implemented.
“The Henry Review was critical of the limitations of the GST and suggested an alternative with lower compliance costs. This would be a cash flow tax on business together with a tax specifically applicable to financial services,” he says.
However, he adds the disadvantage would be that the transition to such a tax would be problematic and unfair. “Lenders would find that interest and loan repayments would be taxed, whereas the relevant costs would not have been deducted when the loan was made. However my paper suggests that these issues are probably not insuperable and it should be possible to develop transitional rules to account for this.” He also says, “it will be necessary to ensure there is no unfair impact on consumers”.
The UNSW Business School 2015 GST Conference is now in its 27th year.
Other papers and presentations will cover the full spread of current GST issues ranging from an update on important changes and developments in the statute & case law through to issues at the coal face of GST and discussions of important GST issues at a policy level, such as adapting it for the burgeoning digital based economy.
Julian Lorkin: 02 9385 9887