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Accountants are calling on the government to deliver fundamental reform of GST as it passes the 25-year mark since its introduction.
GST’s ‘structural weakness’ at heart of tax reform conversation
02 July 2025
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9 minute read
As the goods and services tax hits 25 years since its inception, accountants and professional bodies are pushing for a broadened tax base and reform to help supplement and alleviate pressure for Australia’s small businesses.
Introduced on 1 July 2000, GST had an original $50,000 threshold, which was later amended to $75,000 from 1 July 2007 and has remained unchanged since.
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According to CPA Australia, Treasurer Jim Chalmers’ upcoming Economic Reform Roundtable would be an opportunity to broaden the tax base through fundamental reform of GST.
Natalie Lennon, founder of Two Sides Accounting, told Accountants Daily that the current threshold was significantly outdated and needed to be doubled to $150,000.
“GST has hardly changed since it was implemented in 2000, which was 25 years ago. I think the 10 per cent tax needs to stay the same, as businesses are struggling enough, however, the threshold for registration needs to be increased,” Lennon said.
“Increasing the threshold would reduce compliance costs and complexities for smaller businesses. Businesses turning over $75,000 are barely making enough profit to survive, let alone having to pay accountants and bookkeepers to help with BAS’ and having to pay for software to assist in the process.”
Similar sentiments were echoed by Tripolino Accountants' senior accountant, Anthony Tripolino, who said many taxpayers would welcome an increase to the current $75,000 turnover threshold, as significant change had occurred over the past 25 to 18 years.
Tripolino noted the government should look to increase the breadth of what GST applied to, as confusion still surrounded the determination of what GST should and shouldn’t be applied to.
“In an environment where small businesses are in decline, raising the threshold could provide greater incentive for individuals to start their own ventures,” Tripolino said.
“It would be beneficial for the government to revisit the mindset they held in 2007, as that same approach is needed today. We advocate for further reductions in red tape, and increasing the threshold is a straightforward way to achieve that.”
“In line with the theme of reducing red tape, a very easy way to do so is to increase the breadth of what GST applies to.”
Ahead of the Treasurer’s roundtable, CPA Australia proposed a five-step plan to effectively implement GST reform over the next two years.
The five-step plan proposed by the professional body included:
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Achieve consensus from state and territory governments that GST reform was critical to future federal and state budgets and must be part of economic and productivity reforms.
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Identify what a broadened tax base should look like and model the revenue effects of changes to the rate.
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Assess the impact of changes on both businesses and society.
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Develop tax settings that best rebalance the tax base to increase GST’s contribution and reduce the income tax burden on individuals and businesses, while adjusting the transfer system to support the most vulnerable.
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Design a thorough implementation program to ensure that individuals and businesses were prepared for the changes.
Chris Freeland, chief executive of CPA Australia, said substantive GST reform couldn’t occur overnight, yet it was necessary “to ultimately alleviate the government’s overreliance on personal income tax”.
“It’s time for a grown-up conversation about Australia’s tax system and the GST’s structural weaknesses. For the past quarter of a century the GST has remained virtually unchanged, and its inconsistencies and design flaws – such as taxing some foodstuffs and not others – have been ignored,” he said.
“GST belongs at the heart of any discussion of tax reform. Most tax specialists believe that increasing the GST is the key to broadening the overall tax base. Reducing the reliance on personal income tax would put more money in people’s pockets and ultimately generate more revenue to drive economic growth.”
The body noted that broad public and political support was needed to ensure the tax system was “fit for purpose” for a further 25 years and that the five-step plan to reform GST would be revisited in a submission to Treasury.
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