The opportunities for effectively managing GST cash flow have not been explored in Australia to the same extent as other more established value added tax (VAT) or GST regimes.
A GST review utilising data analytics tools is an incredibly efficient way to understand your GST in flows and out flows and detect GST leakage (as well as offering many other advantages).
Improvement of GST processes and controls not only reduces compliance costs but creates cash flow benefits such as accelerating in flow of input tax credits through avoiding delays in processing tax invoices for purchases. Timing benefits can also be achieved by deferring payment of GST on supplier invoices and accelerating receipt of GST on sales invoices. This helps to avoid situations where a business incurs GST for which it will not receive an input tax credit until the following GST period or where a business remits GST that it has not yet received from a customer.
Permanent cash flow benefits can be achieved by utilising GST elections, concessions and exemptions. Some of these include:
- going concern
- GST grouping
- import GST deferral.
These ideas are only the beginning. As businesses continue to look for ways to improve their cash flow, GST optimisation is sure to become high on the radar.