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  Miscellaneous 2002

Start-up Tax Compliance Costs of the GST: Empirical Evidence from Western Australian Small Businesses

Source: Australian Tax Forum Journal Article

Published Date: 1 Oct 2002

 
This paper discusses the economic impact of the GST on small businesses in WA, particularly their start-up compliance costs. The estimated costs cover the period up until 30th June 2000. A survey of 868 WA small business respondents, undertaken in September/October 2000, reveals that it was costly for small businesses in preparing to comply with the GST requirements. Average gross GST start-up costs (excluding time costs) amounted to $5,006, and including time costs, $7,626. Non-time costs included equipment costs, software costs, accounting and consultancy fees, training course fees, stationery and telephone calls. Average equipment costs per firm were $3,141. Average time spent was 131 hours per firm, with 29 per cent of hours representing compliance with Australian Competition and Consumer Commission (ACCC) requirements. The research also confirmed the economies of scale of the GST start-up compliance costs, a relationship observed in nearly all compliance cost studies.
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