A GST hike has been on the agenda since Prime Minister John Key's opening speech to Parliament in February.
What can small to medium-sized businesses do to get on top of a change?
* Accounting systems: Businesses need to check internal systems can cope with adding a new GST rate
and keeping the old rate during the transitional period. Change is likely to occur part-way through the standard financial year so they must ensure previously-entered data is not affected.
* Pricing: Businesses not able to absorb a GST increase will need to raise prices by 2.2 per cent. Businesses should review their contracts to determine if they can increase pricing for a GST rate hike.
* Consumer activity: Consumers are likely to spend more prior to a GST increase, as before the last change in 1989. Plan ahead to take advantage of this - possibly even encourage consumers to pay up-front for ongoing goods/services.
* Credit notes/debit notes: Review procedures for issuing credit and debit notes. Ensure systems can issue correct tax invoices and notes at old and new rates.
* Contractual obligations: Review long-term agreements for successive supply, voucher systems, agreements where deposits are paid up-front, those priced on a GST-inclusive basis and those involving receipt of progressive payments such as leases and credit contracts.
* GST return periods: If the rate change occurs part-way through a businesses' return period, two GST returns may need to be filed.
* Alan Scott is national tax director for chartered accountancy and business advisory firm BDO.
