GST compliance costs SMEs $13.7 billion a year

23 Feb 2015

MYOB proposes simple GST reforms to save time and money for SMEs

Complying with Australia’s GST rules is costing small business more than $13.7 billion a year, according to new research released today by Australia’s leading accounting software provider, MYOB.

Based on a survey of 1026 SME owners and managers, the research reveals the true cost of the GST burden on the men and women running small and micro-enterprises across the country.

The survey found that a SME spends an average of 84.1 hours a year to collect the tax on behalf of the Australian Government - or more than two full working weeks a year (based on the standard 38 hour working week).

This equates to $6778 a year for each of the estimated 2.02 million SMEs and non-employing business in Australia – or $13.7 billion a year across all SME (based on the hourly rates supplied by the survey respondents).




84.1 hours Owners/directors: 76.3% @ $87.30
Paid employees: 15.1% @ $65.20
Friends/relatives: 8.6% @ $48.20
$6,778 p.a.

MYOB also identified where the GST burden falls within a business. Of the 84.1 annual hours of work each company commits to the GST, 64 hours are performed by the owners and managers. 

MYOB CEO Tim Reed said the government needs to better understand the impact the GST has on the running of a small enterprise. 

“If Australia is to have a debate on the GST then let’s start with the way it is collected and reported. Let’s look at ways to ease the cost and burden on SMEs.” 

“The GST represents two full weeks where the owner’s attention is dragged away from the day to day running of their business. This is a significant drain on the productivity and profitability of SMEs,” said Mr Reed. 

“If the Government’s focus is on improving Australia’s productivity and reducing red-tape, then easing the burden of GST compliance should be a priority,” Mr Reed said.


The survey found that the biggest problem for SMEs is the recording of information needed by the ATO, which takes 78.2 hours a year on average. 

Currently SME operators need to asses each transaction on an invoice to determine if GST applies if the transaction is GST-free. They then have to assign each of the GST-free transactions into one of eight possible categories, based on the Australian Taxation Office’s (ATO) GST-free codes. 

The need to determine and assign codes has nothing to do with the collection of GST revenue as it only relates to transactions that are GST-free. The GST-free codes are used by the ATO to benchmark industries for auditing. 

Mr Reed called on the Australian Government to make a simple and effective reform of the GST by abolishing the requirement to provide additional information on GST-free transactions. 

“We need to simplify the GST so that small business operators need only determine if a transaction is one where GST applies or if it is GST-free.” 

“The need to allocate a GST-free code to each transaction results in uncertainty, confusion and compliance risk. It has nothing to do with the GST the company is required to pay.” 

“This reform would bring Australia in line with New Zealand where there is no requirement to report additional details about GST-free transactions, making it easier for small business to comply.” 

“Australian businesses are spending twice as long on GST compliance than businesses in New Zealand. A New Zealand SME needs 39 hours on average to comply with the GST each year, compared to 84 hours by Australian SMEs. 

“Removing the requirement to report and classify every GST-free transaction is a sensible and modest reform that could be achieved through regulation, avoiding a more difficult political path of negotiation through Parliament.” 

“This is a smart reform that can be achieved now and will provide much needed relief to Australia’s millions of small businesses,” Mr Reed said.




Total time spent on tax each year 131.2 hours 69.4 hours
Time spent on GST compliance each year 84.1 hours 39.0 hours
Total internal cost of tax compliance AUD$10,531 NZ$4,340
Internal cost of GST compliance AUD$6,778 NZ$2,446
External costs of tax compliance (accountants, bookkeepers etc.) AUD$2,433 NZ$1,367


Media inquiries please contact:

Leonie Phillips, Thought Broker

P: 02 9212 5501 M: 0403 063 852 E:

For further comment or other information please contact:

Sarah Beyrath, MYOB Public Relations and Corporate Affairs Manager

P: 02 9089 9043M: 0427 223 841 E:

About the MYOB Business Monitor

Established in 2004, the MYOB Business Monitor is a national survey of small and medium business owners and managers, commissioned to independent market research firm Colmar Brunton. The most recent study ran in January and February 2014, surveying 1,032 Australian operators from sole traders to mid-sized companies, representing the major industry sectors. The Monitor researches business performance and attitudes around areas such as profitability, cash flow, pipeline work, technology usage and government. Note: the weighting of MYOB client and non-client respondents is reflective of overall market proportions.

About MYOB

Established in 1991, MYOB is Australia’s leading accounting software provider. It makes life easier for approx. 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, CRM, websites, job costing, practice management, inventory, mobile payments and more. MYOB also provides ongoing client support via many channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and spends more than AU$35 million annually on research and development. For more information, visit

For MYOB product information, research results, business tips, discussions, client service and more visit the MYOB website, or its The Pulse Blog, LinkedIn, Twitter, Facebook and YouTube.