ARE YOU READY? EXTRA HANDS MAKE LIGHT WORK
15% GST October 1, 2010
The last hike in GST occurred over 20 years ago in 1998. Some of us were actually recruiting then(!) so recall the spike in additional staff that were required to assist organisations make sure they were prepared and sorted. In researching the implications of the GST hike 2010 we came across a few natty articles such as one by Gavin Holley, KPMG Business Advisory Director.
Gavin had this to say: “Putting politics and international comparisons aside for a moment, what are the practical implications for business of an increase in GST? At first glance, they do not seem to be too onerous. And they need not be, if the change is thought through and planned for ahead of time.” Questions Holley suggests you ask yourself are:
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Are you able to update the price of your goods overnight?
For those retail businesses with large inventories, this will be a time consuming exercise. You will need to update any prices shown on your website, as well as any fliers or signage.
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Can your accounting system cope with the change?
Are you assured that the rate of GST in your accounting and point of sale systems can be changed, Will changing it part way through a financial year affect any data entered before the change?
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Is your business prepared for fluctuations in demand?
The equivalent hike in 1989 saw a pre change spike in the demand for goods, especially for those bigger ticket items. Once the rate increased, demand tapered off. It is important to plan ahead so your business can take advantage of increased demand, while avoiding being left with excess inventory or cash flow issues once that demand tapers off.
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Does your GST return period cross the cut off date?
Managing the change will be especially important if it comes into effect part way through your GST return period. For instance, if your GST return period starts on a date other than that of the rate change, you will need to make sure the 12.5% transactions are clearly split from the 15% transactions when completing your GST return.
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Will you adjust your pricing?
Not every business will simply inflate their prices by 2.5 per cent. Will you pass the increase onto your customers, or can your business afford to absorb the GST increase? Competition, cash flow and profitability will need to be considered when making this decision.
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Have you entered into long term contracts?
It will pay to check that pricing in major customer contracts has been agreed on a GST exclusive basis, to avoid holding an unexpected 2.5 per cent shortfall in net revenue.
EXTRA HANDS MAKE LIGHT WORK!
Should you require additional support to assist you with GST related requirements, the Contract & Temp Team at Frog are available to assist.
For all Contract enquiries please click here to contact Hassanah Rudd, Manager Contracting Services today!
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For all Temp enquiries please click here to contact Keri McAdam, Temporary Staffing Services Manager |
