We have just passed the second anniversary of Goods and Services Tax being introduced into the Australian Economy.
Whilst it may be too early to draw final conclusions some interesting patterns are starting to emerge.
GST and Property.
In the property market there were initial fears that the additional impost of GST would hurt the market.
In reality, the Australian property market has quickly and easily absorbed the GST and seen values grow beyond the additional levy.
This is partly due to the underlying strength in the Australian Economy and continued demand for quality property outstripping supply.
The property market was also underpinned by the First Home Buyers Grant which maintained support from the Government at higher levels than initially foreseen.
This has helped continue momentum coupled with the lower interest rate environment and strong consumer confidence.
The windfall earnings received by the government from property sales is expected to continue to fuel infrastructure spending and support of development projects.
GST and Business
Although many businesses have experienced transition problems and higher than expected compliance requirements, overall there is a strong level of acceptance of the benefits of GST being introduced.
In great credit to the Australian Taxation Office, a very compassionate stance was taken with emphasis on education and assisting taxpayers comply and the granting of considerable extension concessions have helped many guide through the new GST maze.
GST and the Individual
Many Australian taxpayers are yet to decide if they are better of under the new system.
Substantial personal tax rate reductions covered the increases due to the GST and gave choice back to the individual in his spending patterns.
For many the transition has been hard as a new savings discipline has been required to be learned.
Many people are now starting to see the benefits of investing the higher disposable income and maintaining a level of savings.
In all, the introduction of GST has had a positive effect, albeit with much political resistance and a high level of initial media bashing.
Undoubtedly GST is here to stay with both major political parties accepting and endorsing its continued place in the Australian economy.
As the sheer mass of the Australian domestic markets continues to grow, we should see GST collections exceed expectations and provide a solid taxation revenue base for the Australian Government to build a better country.
We would also hope to see some of this excess revenues flow back in the form of additional tax rate reductions, particularly for lower income earners.
Further Capital Gains Tax concessions may also be expected in the coming years as the Government seeks to continue its encouraging stance on investment in Australia.
For property investors, all goes well as they will be a significant beneficiary of the improved economy underpinned by GST collections, lower interest rates and the increasing investment market.
We have witnessed this already, with most Australian investment property rising and maintaining strong levels of demand.
With the continued instability in other parts of the world, Australia continues to shine as a safe port in a storm and the Australian property remains great value by international standards for the investor.
