The GST Compliance Costs Of Nonprofit Organisations

Abstract

On 2 December 1998, the Federal Government tabled their policy paper entitled Regulation Impact Statement for the Introduction of a Goods and Services Tax (RIS) in the House of Representatives. The Federal Government predicted that total gross GST compliance costs to Australian businesses in the first year of implementation would be approximately $1,912 million (or $1,195 per firm). Furthermore, it is estimated that the recurrent net compliance costs will be much lower at $131 per firm. Whilst the government made brief references to charitable organisations in their analysis, it stated that the compliance costs faced by nonprofits would, in substance, be no different to the compliance costs faced by businesses or government departments.

This paper examines the RIS process in relation to nonprofit organisations in the context of recent taxation legislation affecting nonprofit organisations. It argues that the assumption that nonprofit compliance costs are similar to government and business costs is flawed and makes a case for the RIS process to be reformed to include more appropriate assessments of the impact of legislation on nonprofit enterprises.