Confusion reigns over GST

Confusion reigns over GST

While politicians squabble over the relative taxable merits of the humble chook, resellers appear to be in the dark as to exactly how the new goods and services tax (GST) will affect them.

In the midst of the confusion, the Australian Retailers Association (ARA) is also warning there may be a cost of up to $5000 per store in technology upgrades to efficiently manage inventory and point-of-sale (POS) under a GST model.

"There is a lot of confusion at the moment and I am not exactly sure how it is going to impact on my business," said Angus Button, director of Sydney's OzSmart Corporate Computers.

"There are some very muddy waters that we will be swimming in," he said. "It is all over the place and the government has a lot of work to do in terms of education.

"Having said that, I do think the GST will be good for the computer industry."

Many retailers are staring down the barrel of an extra couple of hours a day in book- work unless they replace their existing POS systems with something that electronically manages different tax rates for different products, according to Michael Lonie, executive director for the ARA.

He said the ARA estimates the cost of making POS systems GST compliant is as much as $5000 per store for a single site and $15,000 per site for larger organisations. "We will be making representations to the Government to obtain compensation for that," Lonie said.

"Under the GST, inventory management will become critical but it is not all bad news if it stimulates a mass shift to new technology because there are many business efficiency benefits from that. The cost is going to be a killer for many, though," Lonie said.

Earlwin Fong, sales manager at Darwin value-adding reseller Computer Info, is also baffled about how a GST will affect his business. With a business model including a large retail outlet as well as on-site support and repair, he is concerned about the compliancy of his accounting and invoicing package.

"If I am charging $100 an hour for on-site work, I'm not even sure whether I have to start charging $110 or whether I have to include a new GST component in my invoices."

Fong was also anxious about how his customers will react, wondering whether they would be expecting him to trim his hourly return so that their total bill remains at $100.

"It is all a bit scary for a business like ours as you never know how customers are going to react when they are suddenly asked to pay extra," Fong said.

"It is also annoying that we will have to upgrade our accounting and point-of-sale systems, which involves repurchasing and retraining."

Denis Moorfoot, store manager at Choice Connections' Geelong outlet, felt an across-the-board 22 per cent tax being replaced by a 10 per cent GST should mean cheaper computers. That has to be an opportunity for retailers, he said.

However, Moorfoot was wondering what would happen to sales in the months leading up to the implementation of the GST.

"If computers are going to be 10-12 per cent less expensive under the GST, then surely those in the know will not buy in the last few months of the current tax system," Moorfoot said.

"And what about those who currently buy tax exempt? There may be a rush to buy up big just before the new system comes in. Personally, I don't really know what will happen and how it will affect us, but I would like to know more," he said.

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