Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

KPMG downplays benefits of financial services GST

Professional services giant KPMG believes that calls to broaden the GST base to financial services miss the fact that financial institutions already pay GST via input taxation.

Liberal MP Dan Tehan argued for expansion of the GST base in an editorial for the Australian Financial Review on Monday – with financial services singled out as “where we should start”.

“The financial services sector has come a long way since the year 2000, as has the technology used to record and track the financial movements,” he said.

Advertisement
Advertisement

“We are now very close to having the ability to apply the GST to these services and it should be the first thing that is reviewed when we consider broadening the GST.”

But KPMG tax partner Nick Kallinikos played down the merits of applying the GST to financial services on a number of fronts.

First, he said, it ignores the fact that banks, life insurers and superannuation funds are already paying GST though the denial of credits on their ‘inputs’.

Mr Kallinikos said that banks do not pay GST on their deposits or loans – but banks’ inputs such as building rental and computer equipment are liable for GST.

And importantly, financial services companies cannot claim a credit for the GST paid on their inputs, he said.

“If you are a financial services provider to the extent that your inputs relate to making financial supplies, you’re denied the ability to claim a credit,” Mr Kallinikos said.

Secondly, he pointed to the complexity of calculating bank margins and then attempting to apply GST to them.

“The VAT/GST system has been around 50 years, and in those jurisdictions where it’s been around that period of time, no one has found an easy solution,” Mr Kallinikos said.

China recently implemented a VAT, but after two years the authoritarian government has not been able to apply the tax to financial services, despite announcing it intends to do so, he said.

Australian Bankers’ Association chief economist Tony Pearson said a GST on financial services would be an “additional tax paid by consumers – essentially a tax on home loans”.

KPMG downplays benefits of financial services GST
mortgagebusiness

Latest News

Firstmac managing director Kim Cannon is “disappointed” that Treasury rejected the non-bank’s proposed acquisition of Maleny Credit Un...

Asset finance group Consolidated Operations Group has announced that it will “scale back” its equipment leasing but will continue its as...

Half of Australian businesses have already been hit by the economic fallout from the coronavirus outbreak, with approximately 86 per cent ex...

FROM THE WEB
podcast

LATEST PODCAST: The rush to save small businesses

Do you think Australia will move to quantitative easing this year?

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.