Australian businesses with a history of filing late or incorrect GST reports will be moved to monthly reporting from quarterly reporting. This change is designed to improve compliance and reduce the GST tax gap which has been widening in recent years.
The rule changes also apply to businesses that have missed payments or submitted inaccurate Business Activity Statements (BAS). The ATO will notify affected businesses in writing to informing them of their new reporting schedule.
As of March 2023, only around 4 per cent of small businesses reported their GST monthly. This change will make things harder for many but the ATO believes monthly reporting will help businesses track their finances more effectively. Enhanced finance tracking will also give companies better insights into their cashflow, helping them make better decisions. The aim is to make GST reporting a more seamless process so businesses can focus on growth without the pressure of falling behind on their obligations.
This change is part of the ATO’s broader strategy to improve the integrity of the GST system. In 2022-2023, the net GST was $7.9 billion, up from $4.4 billion in the previous year. This increase highlights the ongoing challenges the ATO faces in ensuring all businesses meet their tax responsibilities.
One of the main drivers of this widening gap is non-compliance. However, the ATO is also dealing with a rise in fraudulent activities. Scammers have been exploiting the GST system by creating fake businesses to fraudulently claim GST refunds. In response, the ATO has ramped up its efforts to combat this issue, conducting over 33,000 pre-issue checks for businesses newly registered for GST in 2023-2024.
While the move to monthly GST reporting may require extra effort, the ATO is confident this will ultimately lead to better tax compliance and a more streamlined experience for businesses. The long-term objective is to make the GST process so automatic that businesses can “just happen” to comply, as ATO Commissioner Rob Heferen mentioned in October 2024.
The transition to monthly reporting reflects the ATO’s ongoing commitment to enhancing the integrity of the GST system and ensuring that all businesses contribute fairly to the tax system. For affected businesses, staying on top of monthly reporting will be crucial to avoid penalties and ensure smooth business operations.
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