New financial technology that overlays the existing electronic banking system will automatically capture Goods & Services Tax (GST) and other taxes while helping to banish the black economy in Australia.
Recent media reports quote Federal Government tax revenue losses of an estimated $15 billion due to the widespread cash economy. These losses have grown, measured against the Australian Bureau of Statistic’s 2013 data, that estimated a cash economy of 1.5 per cent of GDP, or about $21 billion. Of that, about $10 billion was reportedly untaxed.
Business Transactions Concept’s (BTC) patented Tax Capture technology isolates the tax component of every business transaction that occurs via electronic banking platforms. This includes the soon-to-be-introduced New Payments Platform (NPP), for faster every day payments. The technology provides a unique opportunity for the banking sector to improve the reporting, compliance and efficiency of all financial transactions, including PAYG, Superannuation and GST, and which will also help to reduce tax dodging.
BTC Director Bernie Pack says, “This innovative technology enables multiple payments to be made through a single interface within the existing electronic banking system, while transmitting data alongside money. For example, once a GST tax component is isolated, it is removed from the transaction amount before settlement. Banking systems then withhold, report and reconcile GST for the relevant payment period on behalf of each business client.
“Using the electronic banking in this way drastically reduces GST administration, compliance and reporting costs for business, recently estimated by MYOB to exceed $13.7 billion. Banks are pivotal to the success of this scheme and to capturing tax payments,” Pack adds.
Can BAS be eliminated?
The future requirement for Australian business to lodge quarterly Business Activity Statements (BAS) is also in the sights of BTC.
Pack says, “As electronic banking systems withhold, report and reconcile GST collected by business clients, the payment of GST is automated. This reduces the need for businesses to complete quarterly BAS statements. Automating the capture of GST at the transaction level will also help to increase GST receipts, which in turn will benefit States and Territories, and reduce pressure on the Federal Government to raise the rate of GST.
“GST tax capture at the transaction level will also help reduce corporate debt to the ATO and combat non-cash fraud estimated by the ATO to be worth more than $400 million per annum,” Pack concludes.
Inside Small Business