Colleges face taxing time

April 28, 2000

The introduction of a new 10 per cent goods and services tax in Australia on July 1 is expected to cost the nation's universities more than A$40 million (Pounds 15 million), while ongoing annual costs are likely to add many millions more.

Introduction of the tax represents the most extensive taxation reform in Australian history. It replaces several other taxes, including sales tax and wholesale tax, but it also applies to goods and services not currently taxed.

Australia's oldest higher education institution, the University of Sydney, estimates its additional administrative costs to prepare for the tax at about A$2 million. A spokesman said there would also be administrative costs for each user within the university of about A$140,000, with ongoing costs put at A$65,000 a year.

The additional costs have to be absorbed by each university. Individual faculties and departments as well as staff and students will pay the tax on a range of goods and services they make use of.

Students will be required to pay the tax on general service fees, printing, photocopying, compulsory subscriptions, student's association membership, computer software and internet charges.

To prepare for the tax, universities have had to hire additional expert personnel. They have also had to upgrade their computer systems to cope with the vast complexity of the new tax system.

Universities say the main costs will be in administering the tax and that they will be acting as a tax collector for the government.

Although teaching and research is tax-free, research grants will be subject to the tax. However, it seems likely that whoever provides the grant will increase the amount to absorb the impact of the tax as they will be able to claim the money back as a tax credit.

The costs of implementing the tax and its impact on revenues will also have a dramatic impact on higher education unions - and that means membership dues will have to rise.

The National Tertiary Education Union estimates its tax compliance costs across all levels of the organisation at between A$1.5 and A$2 million.

NTEU general secretary Graham McCulloch said: "We will have to increase our membership fees substantially."

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