Delays by the Senate to changes in the Sales Tax Act will give unscrupulous resellers a wider window of opportunity to flout the existing regime. The changes had been expected to be implemented before Christmas.
The changes to sales tax are aimed at toughening up the exemptions from paying sales tax. It will mean companies applying for tax exempt status will have to prove they have a history of paying tax; then go through a registration and accreditation process.
While making the process more bureaucratic, the move is seen by all fair resellers and distributors as being beneficial to the channel.
"My understanding is that while some companies will be annoyed at having to go through a longer process [to gain tax exempt status] they will be happy to see the crooked operators pushed out of the industry," said a spokesman for the ATO.
A major problem
Patrick Hunt, a KPMG partner specialising in indirect tax, said sales tax avoidance is widespread.
"You only have to look at some of the ads for items like printers and modems to realise there's no way a reseller could sell at that price and make a profit if the tax is being paid," said Hunt.
He added it was unlikely the changes to the legislation would be passed before Christmas.
"There would then be a period of grace while companies apply under the new scheme," said Hunt.
Michael Bosnar, general manager of Prion Technology Distribution, estimated up to $200 million a year in tax was being avoided by dishonest dealers.
"We have walked away from about $1.5 million a month in business by refusing to deal with resellers who evade sales tax," he said.