Jayne, who founded Blue
Label Life back in 2005, and now turns over in excess of
$1 million a year, says that finding the perfect match
may come at a cost that's too high for some people.
"For a certain percentage
of individuals there may be a deterrent who measure love
in monetary terms, however, individuals who genuinely
want to meet someone see the bigger picture," she says.
An additional $130 billion
A GST raise to 15 per cent
could see the federal government raise an additional
$130 billion in 2017-18 according to figures from the
Parliamentary Budget Office and could go some way to
ending funding disputes between the federal government
and the states.
This is something the
federal government is keen to emphasise.
"The government has been
in discussions with state and territory governments
around their tax bases, whether or not they have got
their tax system right and whether it is doing what it
is meant to do which is also about encouraging
Australians to work, save, and invest more," the
Minister for Small Business, Kelly O'Dwyer, says.
"Let's not forget the GST
is a tax where the money goes directly to the states and
the government is not looking to increase taxes and
chase ever increasing spending."
Currently, Australia has
one of the lowest consumption taxes in the world, and
expanding the GST to cover food, health and education
amongst all other goods and services currently exempt
would mean 100 per cent of goods and services would be
taxed, rather than the current rate of 47 per cent.
A critical decision
But the potential rise in
GST presents many problems for small businesses in
Australia.
"The extra 5 per cent GST
would cause us to make a critical decision," says Rik
Schnabel, owner of Life Beyond Limits. "Do we lift our
rates and risk missing out on business or relinquish
$50,000 plus from our profits before tax?"
Life Beyond Limits is a
training company where accredited trainers of Neuro-Linguistic
Programming and life coaching offer a range of courses
and turns over in excess of $1 million a year.
"Our products are valued
at around $2975," Schnabel says. "This means we would
have to move into the critical $3000 plus mark or lose
profits. It is a big decision."
Schnabel has an
alternative solution to raising the GST.
"How about reducing the
number of politicians in this over-governed country?"
Exporters and importers
And even exporting or
importing goods will have an effect on local businesses.
"I run a yacht importing
business specialising in luxury cruising catamarans
worth between $500,000 and $3 million," Brent Vaughan,
director of Multihull Central says. "These boats are all
built overseas, as are most of this type, so some of our
customers take delivery internationally to avoid paying
duty and GST already."
Multihull Central turned
over $16 million last financial year and expects that a
rise in GST may have an impact not only on his business,
but on local businesses as well.
"By increasing the GST
this will provide a larger disincentive to take delivery
in Australia, which means the local trades and support
services in Australia don't get the value or pass on the
multiplier effect of these purchases," Vaughan says.
"This is a shame, as the
local businesses involved in the industry are family
businesses and small businesses who could benefit from
this activity."
Labor opposes any hike
With a federal election
looming in 2016, the federal opposition have been quick
to seize on the opportunity to attack the federal
government increasing the tax burden on ordinary
Australians.
"The Labor Party is
opposed to raising the GST and it will be a massive hit
to confidence and a massive hit to small businesses that
need people in their businesses and spending," The
shadow small business minister Michelle Rowland says.
"Labor is committed to
working in a bipartisan way to reduce the amount of tax
paid by small business.
"Labor also wants to make
it easier for small business to incorporate. This will
allow them to gain the legal protection of limited
liability, promote asset protection, retain profits for
working capital, succession planning and income
distribution without having to deal with unnecessary red
tape."
Added complexity
There are pro and cons to
all businesses that pay GST as Ernst & Young indirect
tax leader Brad Miller explains.
"Small businesses dealing
in B2B may have the added complexity of contracts that
lock in pricing, effectively preventing the passing on
of a GST rate increase and potentially lowering real
turnover as a result," Young says. "Adequate
transitional provisions to protect such small businesses
would be crucial.
"The impact of a 5 per
cent GST rate increase on cash flow for small business
is much more complex, since cash flow is a function of
payment cycles on both inputs and outputs and is also a
function of the overall impact on turnover.
"For small businesses
dealing with B2C a GST rate increase should be broadly
cash flow positive, provided they are actually in a
position to increase the price by the full 5 per cent
without losing sales."
Young also says small
businesses with long payment cycles or poor billing
practices could be disadvantaged but points out that
there is also the added benefit of reducing the tax bill
of those non-incorporated small businesses. Any
reduction in the corporate tax rate will assist those
small businesses operating as companies.
"Small businesses would
need to have an even stronger than usual focus on cash
flow management when dealing with a GST rate increase,"
he says.
Tips if GST does increase
1) Instead of raising
invoices on the last day of the month, move them to the
first day of the next month, which may delay the need to
pay the GST included in those invoices to the ATO by a
month.
2) Similarly, processing
expense invoices into an accounts payable system earlier
may allow the earlier recovery of GST included within
those expenses, without necessarily paying creditors any
earlier.
3) Outside of pro-actively
managing the processing of invoices (both accounts
payable and accounts receivable), small businesses
should review their credit terms and in particular the
days they allow before payment is due.
4) Small businesses should
also consider introducing prompt payment discounts or
incentives to encourage earlier payment by customers.
Source:
The Canberra Times, dated 02/12/2015. |