Updated: May 16, 2018
Let's talk about GST. I don't mean to make you yawn, but there is something on my mind that seems like no one else has spoken about - yet.
The Federal Budget was just released and one of the notes, summarised nicely by the NSW Business Chamber: "The deficit for 2017-18 is expected to be $18.2bn, again improved from the $29.4bn deficit expected last year. The Budget bottom line has been improved by a larger than expected tax take due to favourable economic conditions, with receipts $11bn higher than expected."
Here's the bone I have to pick: are we really surprised? Where's it coming from? I have my theory: International businesses newly paying GST.
Predominantly during the 2018 Financial Year, for the very first time, international businesses have had to phase in applying GST to their sales and hand over that GST to the ATO. You may have noticed this, seeing monthly subscriptions increase, or an additional line item when making a purchase online. It's not that I have anything against those businesses pushing the expense onto the consumer. What gets me is that shear amount of GST funnelling in, with little to no extra expense to process by the ATO.
Here's a specific example: Netflix
Netflix plans are $9.99, $13.99 or $17.99/month. The main difference between the plans is how many screens you can watch on at the same time. Personally, I don't know anyone with the lowest subscription. The same Roy Morgan link notes there's about 7.5 million Netflix users in Australia - so, it's reasonable to deduce that many subscribers are on the higher plans. But, just for kicks let's say everyone is on the $9.99 plan. This equates to:
$.908 GST Each Month per subscriber
$2.6 Million a month in GST.
$31.2 Million a year.
IF everyone is on the lowest plan.
If we used the $13.99 plan as an average:
$1.2718 GST Each Month per Subscriber
$3.688 Million a month in GST.
$44.259 Million a Year.
Are your eye's bugging out yet? That's JUST Netflix.
Other businesses include Harvest, Wix, oh yeah and one more little guy:
Have a personalised Gmail account? Use Google Adwords, G Suite? They were early to the show adding GST in 2016.
At the time of this writing, I can't find any details from the ATO advising exactly how much "new" GST they are now bringing in. If you know - please share, cause I'm a curious one when it comes to numbers!
Personally, I'm not upset we are all now paying a smidget more for various subscriptions and purchases. And this is nothing against these businesses, because they are only complying with what Australian law has demanded of them. But, I am curious about where it's going. Lets say, for some reason the ATO had to employ another 100 people to handle all the new reconciliation that's happening - and as a BAS Agent and Bookkeeper who does what these newbies would need to be doing on a daily basis, I reckon I'm being pretty generous in that estimate. Putting all of those individuals on 65k salary, noting say 3mil in new office expenses, super, insurances, etc annually, I'm only getting just under 10mil in expenses. And that's to handle ALL the new GST coming in.
Let's say Netflix subscriptions cover that expense. ATO is still receiving another 34 million from Netflix, plus all the GST coming from Google, Dropbox, Amazon, Canva, Harvest, Wix......
People are too well educated these days for this to go unnoticed for long. I hope the ATO will be turning around in a year or so and announcing huge savings and advantages for small business owners. There must be a major break for local businesses coming - and if not, the roads, councils, education, climate change fighters and every other facet ought to be getting a boost!