The 1st of October passed without the sky falling on our heads, seemingly. I haven’t heard of any major systems failures on the day as traders switched to the new rate.
Some 24hr traders closed up for a few hours either last Thursday/Friday night or over the weekend to allow time to get the switch done. No doubt configuring for the personal tax rate changes on the same day added to the amount of work needed to be done.
The focus in recent days has been on pricing. There’s definitely been a variety of approaches. Some prices adjusted by the GST increase, some went up more (due to other cost increases we’re told) and some stayed the same.
Next year when the company tax rate reduces to 28% from 1 July it will be interesting to see whether that reduction in cost finds its way into lower consumer prices. Theoretically there’s no reason why it shouldn’t.
GST registered businesses will be starting to work on their September GST returns, the last at the old rate. For those registered on a payments basis they have to prepare an adjustment calculation to take into account debtors and creditors as at 30 September. To be honest it’s difficult to understand the policy logic behind that adjustment which can leave some businesses out of pocket for a while. I can’t help thinking there is a better way for cash basis businesses to account correctly for the rate change.
Some this week will be preoccupied on the new “11 day rule”. That was given to us by the politicians in the new GST transitional provisions. Essentially, provided certain requirements are met, a trader has until 11 October to issue invoices at the old GST rate. The invoices have to be “dated” 30 September and must have 60 day payment terms. The concession is really aimed at those who bill monthly in arrears for standing orders such as regular deliveries of goods or subscriptions for items like magazines.
Those transactions will be accounted for as part of the September GST return.
Good luck to everyone doing the form filling over the next couple of months.