Tax functions are faced with the growing challenges of staying abreast of changes to the GST legislation, ATO interpretation and case law, and how these changes impact on their rapidly evolving business models.
They are also expected to better manage the costs associated with GST compliance, and demonstrate strong controls over the GST compliance process.
Adding to these challenges, many taxpayers are now having to respond to the ATO’s recently commenced GST Streamlined Assurance Review (“SAR”) program, covering the top 1,000 public and multinational groups.
In the paper 'Better Managing GST – New Developments', Andrew Cavenor, and Ravnit Narayan, (both EY) presented at the NSW Annual Tax Forum in May 2019, Andrew and Ravnit summarised the key changes of the last twelve months to the GST law, ATO interpretations, and case law.
It also considers how taxpayers can prepare for an ATO GST SAR, and concludes with comments on how digital developments are helping tax functions better manage GST risk.
Their paper is excerpted in this post.
New GST Developments
In the technical GST space, the landscape of GST in the past few years has involved various key technical developments in relation to intangible and tangible cross-border supplies (e.g. the ‘Netflix tax’) and property transactions (e.g. withholding of GST by purchasers of new residential premises).
In the past twelve months, there have been some other areas that have drawn some attention. The following key recent developments in GST are discussed in the paper:
- HKYB and Commissioner of Taxation (Taxation)  AATA 4770 (31 October 2018) – A recent GST case that highlights the consequences when the fundamental principles of GST and other tax issues not carefully considered in the context of a taxpayer’s specific business model.
- Draft Goods and Services Tax Determination 2018/D1 - guidance on the creditable purpose of acquisitions in a credit card issuing business.
- Taxpayer alert TA 2018/3 - GST implications of certain development lease arrangements involving developers and government entities.
- Recent developments in relation to tour operators – Exposure Draft Legislation requiring offshore tour operators to register and account for GST on hotel bookings in Australia and PCG 2018/6 outlining the circumstances where the Commissioner will not apply compliance resources to examine whether a tour operator is acting as agent or as principal.
- Social and affordable housing – ATO’s change of approach in relation to benchmark market values that may impact the current GST-free classification.
- New Tax System (Goods and Services Tax) Regulations 2019: The previous GST regulations are repealed and replaced with new GST regulations.
Digital developments – better managing GST
The ATO’s new GST SAR program has been effective in elevating the discussion of taxpayers’ governance of indirect taxes. This program is accelerating a change in thinking towards using technology as a potential means of demonstrating good governance – ie “how” indirect tax risk is managed.
New digital solutions are increasingly being used by tax functions (such as automation and data analytics) to allow tax functions to demonstrate stronger governance over GST processes in a cost-effective manner. Such developments, are discussed in the paper, along with and the ATO’s current position on data-centric tax management.
The paper is available to view here.
Andrew Cavenor is a Partner in EY’s Indirect Tax practice in Sydney. He leads EY’s Indirect Tax Digital practice, focusing on the use of technology to improve management of GST risks.
Andrew has over 20 years of experience in indirect taxes and has provided advice on all aspects of the GST law to multinational corporates and the government sector.
Ravnit Narayan is a Senior Manager in EY’s Indirect Tax practice. He has over 10 years of technical GST and extensive experience in advising on GST issues relevant to both corporate and government entities, including ATO audits and transactions of all types.
Don't forget, the National GST Intensive takes place 12 - 13 September 2019 in Melbourne. Find out more about this year's program on our website.