Fortunately for the Government, controversy over the GST has focused on "goods" rather than "services". People could almost be forgiven for believing that the new tax only applies to those items that previously attracted sales tax. Has the current call by women to drop the GST on tampons succeeded in only taking emphasis from the fact that they will now be taxed on previously tax-free services? Their next visit to the beauty parlour will increase by 10 per cent. The increase in the cost of the next car service will hinge on the amount of labour involved compared to spare parts used. Tennis and golf club fees, massage and chiropractic charges, accounting, legal and counselling fees will all increase by 10 per cent. I don't recall any claims for the dropping of the GST on any service.
Could it be that the GST on services is a "sleeper" in the minds of the average consumer? Could it be that the GST on services might be overlooked by accounting and financial software developers and resellers?
How do you keep a tax that you agreed to abolish? Simple! Change its name! Under the current system of Wholesale Sales Tax, wine attracts the massive rate of 41 per cent. From the July 1, this rate will be dropped to 29 per cent under the new heading of Wine Equalisation Tax, or WET - what an appropriate abbreviation!
Like the Wholesale Sales Tax, the WET will be paid on the value of the goods at the last wholesale sale. Where there is no wholesale sale then it will be paid on an equivalent sale value. In fact, most of the provisions of the current Wholesale Sales Tax will be carried over to the WET. GST will then be applied to these wine products when they are sold at retail.
Resellers will need to ensure that any software being sold into the wine industry caters for this new tax. It will apply to all wine manufacturers, wine wholesalers and wine importers. However, where a wine retailer also sells wine at a wholesale point then any retail software will need to include it also.
The tax will apply to wine, sake, cider and mead. All such wine stocks held at the 1st July will be entitled to a refund of the difference between the 41 per cent WST paid on purchase and the new WET of 29 per cent.
To ensure that small wine producers are not adversely affected by the new tax, the Federal Government will introduce a rebate system for cellar door and mail order sales. This rebate will be struck at 14 per cent of the wholesale value of such sales up to $300,000 per year. The rebate then tapers out on annual sales between $300,000 and $580,000 per year.
The State Government already offers a similar 15 per cent rebate on such sales. This means that coupled with the new Federal Government rebate, cellar door and mail order sales up to $300,000 per year will not be affected by the WET!
Government collections of the WET will be under the same provisions as the GST. This means that at the end of each quarter, wine producers will need to account for the WET along with the GST, FBT, PAYE and the new Pay-As-You-Go. This is yet another example of how the new GST is simplifying and reducing the cost of tax compliance for small business!