On 1 July 2000, Australia experienced one of its most significant tax reform events with the introduction of goods and services tax (GST). The ATO’s Deborah Jenkins was working at the coalface to get the new tax off the ground. She is now Deputy Commissioner for Small Business and is in charge of the GST product.
To mark this 20-year milestone, Deborah shares her reflections on GST with Tax & Super Australia’s tax counsel John Jeffreys. She recalls the “heady but fun” days of implementation, and why going back to the basics is still what makes GST work best.
John Jeffreys: Deborah, you’ve had a long and distinguished career in tax. Can you tell us how it started?
Deborah Jenkins: Look, I must say that when I was a little girl, I probably didn’t say, “When I grow up, I want to do GST”. But I actually love it! I started out with New Zealand’s Inland Revenue Department doing transfer pricing, of all things. My background is finance and economics. So then very quickly I moved to doing income tax, fringe benefits tax, and then a little bit of GST there.
In New Zealand there aren’t that many GST specialists, and I started doing Australian GST while I was there. And it doesn’t make much sense to be doing Australian GST while in New Zealand. So, I came “across the ditch”. I was on my way to the UK for the typical “overseas experience” but was convinced to stay in Australia for a little while. And here I am, 20 years later.
JJ: Well, we’re glad you stayed! When you first came to Australia to assist KPMG clients with GST, what were your expectations? Were they met?
DJ: When I arrived, it was in the heady days of GST implementation. It was pretty crazy times! We were jumping on planes across the country. And, I just remember that, for me as a really quite junior staff member then, we would just sort of be thrown out to work and everyone pitched in to help.
Everything seemed so big. I’d come from little old New Zealand and everything was supersized here. It was so fast moving in those days. Things changed all the time, but it was a fun time.
I remember presenting to the Australian Football League (AFL) board about GST. I went back to the office and my colleagues said, “Oh my goodness! Who did you see?” Of course, I couldn’t remember anyone’s name because AFL meant nothing to a Kiwi!
JJ: You’ve mentioned your experience with the AFL board. Do you have any other interesting anecdotes or special memories in relation to the introduction of GST?
DJ: There are so many! There’s one I vividly remember about the night of GST implementation. For those people who can’t remember that time, we’d just come through Y2K and we’d all sort of survived, and then went into GST implementation.
That night, our team that had worked really, really hard to get to June had a dinner to celebrate at a Melbourne hotel. The biggest thing I remember of that night — and this is actually an anticlimax — is I could not get a taxi home! All the taxis had been taken off the roads to change their meters so they could cope with GST. I vividly remember walking up St Kilda Road from the city in an attempt to get home.
But there are many memories of the camaraderie and working with the industry. There was just that sense of all of us pitching in and working together. It didn’t matter whether you were from the tax office, from the profession or from the industry. There was a feeling that everyone wanted to make it work. So it was a lovely time.
JJ: What was the most challenging aspect of that time? And I suppose even if you think about the last 20 years in relation to GST, what has been most challenging?
DJ: It was such a big change. If I think about the technology changes that we had at that time…the thought of going digital was kind of crazy. People would say, “I don’t have a printer at home” or “I don’t have any equipment at home…” And I think it was a real mindset change at that time. GST also had a long gestation period, which was quite overwhelming. But I reflect back, and I’m sure from a professional perspective, that the benefits that people got from going through that big change were massive. (Continued below……)
Tax Wrap podcast: Deborah Jenkins speaks about 20 years of GST
And the stories of people literally coming in with their shoe boxes [full of receipts]! I also remember a very large company that I was working with needed to lodge its first BAS return. And the numbers they needed to put on the boxes were actually too large to fit on the BAS return!
Look, some of the challenges that we had then are some of the challenges we have today. If you think about GST registrations, there’s around 2.8 million GST registrations. And around 80% of those are small businesses. Added to that, you have a churn of about 300,000 businesses each year. So you are constantly trying to educate people to make sure that they’ve got good record keeping. And if there’s one thing that I think is always a challenge, is that you’ve got to do the basics brilliantly. If you have the fundamentals in place, then things can go much easier.
JJ: Looking over that 20 years, and maybe even at that short period of introduction, what do you think worked really well with the GST?
DJ: I think GST is a very successful tax. It’s been a very stable tax, and it really did make people have good record keeping. I do think it really helps small businesses in particular. The other thing that GST works very well for is that it helps GST practitioners to have a really good understanding of systems and processes. As GST practitioners, we ask lots of very difficult questions. We sort of say, “Well, why does that happen? And what’s the contract and what are you selling?” And I think that’s some of the real beauty of the GST system in Australia. What also works well, is the work that everyone does with the tax practitioners. GST wouldn’t be as successful as it is today without the support of both industry, GST practitioners, and obviously the ATO working together.
JJ: Absolutely. GST really makes you think about what happens in a business and analyse it. What’s the most important thing you learned as a GST practitioner?
DJ: I think it goes back to the point that we were just talking about. Being curious as a GST practitioner, wanting to understand the business, how it works, how it all fits together. I think sometimes if you’re just looking at a return at the end of the year, it can be very easy to slip into just looking at the numbers.
But GST practitioners have the opportunity to be in regular contact with their clients to really understand the business. They’ve got a great opportunity to look at cash flow and understand cash flow. So I think GST practitioners undersell their value. I think they know a lot about the business and I always encourage GST practitioners to really sell that. That’s a real value add.
JJ: That’s very good advice for our members. Deborah, you are now the Deputy Commissioner in charge of the GST product and the Deputy Commissioner for Small Business. What’s front of your mind for businesses to be aware of to make sure they get their GST obligations right?
DJ: If I’d answered that question even five years ago, I would have said that the technical aspect is really important — it’s obviously a foundation, a cornerstone. But so much of it is actually about having good systems and processes in place. As I’m sure many of your members know that with GST, if you make a coding error or if you have classified something incorrectly, that error repeats and repeats and repeats until you find it.
So, the area of focus is on education, prevention and support — making sure that people know what they need to know. But a really important lesson for me was always about going back to the basics. When are they issuing invoices? Are the dates on them correct? Were they posting them? Were they clearing out some of those accounts? It’s really important that we focus on doing the basics well and making sure that you have a good solid system in place within your organisation.
And of course, if I think about how cloud accounting and software has evolved too. Some of the information that people can get out of their systems now makes a really big difference. Technical is obviously very important. And I do love a bit of technical! I’m laughing now, because I actually right now have an old copy of the GST legislation underneath my iPad. It’s one from 1999!
JJ: Don’t we all love a bit of technical! Now, we understand that last year the ATO changed its internal structure for how it manages the GST program. Why did it do that? And are you seeing benefits from this new approach?
DJ: For many people who’ve interacted with the ATO over the years, we’ve had a sort of a separate GST area since implementation. That made a lot of sense when you need to have a real focus on GST. But what we also know is that within large corporates, many have a GST specialist, possibly a GST lawyer who’s looking after the GST, and many of them also have a GST manager within that organisation.
But when I came to small business I discovered that actually the person doing the GST is the same person doing payroll, HR, finance, marketing… And so we need to take quite a different approach to the markets. Now I have ultimate responsibility for the GST product, but I’m supported across the ATO with people who look after GST within our market segments.
For example, we have a market segment that looks after the public groups and international, and they obviously have a lot of the technical issues, cross border issues and financial services issues. And you’ve sort of got the middle market or private wealth, and they have a lot of family issues around trusts and other bits and pieces and property sits there as well.
And then at my end of town — we deal with everything! We just find it really helps because for my market they don’t want someone to come in and talk to them separately about GST, because tax to them actually often includes state taxes and payroll taxes. They don’t distinguish GST separately. We’re finding it’s going really well, but I still have an area that looks after technical that sits under me to provide that holistic approach to technical.
JJ: What do you enjoy about your current role? It’s a pretty big brief that you have.
DJ: Am I allowed to say everything? Is that okay? [Laughs] I’m honestly very, very lucky in my job. I get to meet some amazing people across Australia every day, and small businesses are so diverse as well. I love that market. It’s sort of a bit of a coming home to go back to looking after GST and to see many friendly faces who have been in the GST space for 20-plus years. I do love the fact that I can make a difference to everyday Australians with some of the things that I can influence. Whether that’s making sure that we have easy-to-read content, making sure that we have some information that’s available, or always working to see how we can improve the tax and super system. So I’m a pretty lucky person. I do love my job.
JJ: That’s tremendous. Deborah, have you got any other comments that you’d like to make about GST, the Australian tax industry or the role of the ATO?
DJ: I think we should be proud as Australians about how well our tax system operates. We can always say, “Well, we could do this better” or “We could do that better,” but I think the tax office together with the tax profession do a wonderful job as custodians of the system. The vast majority of people want to do the right thing, and it’s my job to make sure that they do the right thing and that they’ve got the information and the tools to do it.
When I reflect on our ability as a nation to be able to support people in need, including in these COVID-19 times right now, it comes about because we have a really good solid tax and super system. And because people have trust and confidence in both the ATO and in the tax profession. So I think we are pretty lucky, but we couldn’t do it without the help of tax professionals.