Taxing Financial Services under Australia’s GST

The author considers that the assumption that financial services are too difficult to tax under a GST is flawed. When the GST was introduced in Australia, that flawed assumption led to the exempting (input taxing) of financial services, which comes at a cost of almost AUD 6 billion per annum to the Australian revenue base. In this article, the author explains that an addition method of taxation would be effective in fully taxing financial services under Australia’s GST, and also for other jurisdictions. This method has many advantages and few disadvantages relative to the cash flow methods of taxation, and is the superior method for fully taxing financial services.