In that way, if Ajax loses, it has the advantage of tax relief for all of its own costs and Joe’s costs (as assessed), including the GST element in each party’s costs whilst, on the other hand, if Joe loses he carries all of his costs and Ajax costs (as assessed), including the GST on each.
Anyone associated with legal process knows that access to justice has largely become the province of big business. The small business sector and the private individual cannot really afford to litigate.
Government provision of relatively informal dispute resolution facilities for minor consumer matters is of assistance at the lower end of litigation. But between that level and even local court action the costs can be prohibitive for the ordinary litigant.
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Where legal expenses, including GST, can be deducted from income for taxation purposes, it can provide some relief for litigants and other users of legal services. But otherwise it can be a heavy financial burden. And where that burden is being increased by 10 percent then, unarguably, GST is a tax on a citizen’s basic right to justice.
Within the scope of taxation fraud, the leakage of GST must represent a significant loss to government sources. The anecdotal evidence relating to the practices of businesses and traders in particular, who charge GST without being registered and/or those who are registered but do not pass on to the Tax Office all of what is collected, is a matter of general concern which taxation agencies seem under resourced to adequately address.
Whilst more could be done to tighten up on this leakage to ensure that the present 10 percent of GST is fully collected, there is a strong case to grant GST relief in the form of a rebate, to non-income related consumers of legal services on whom that tax is imposed, directly and indirectly, in the course of the pursuit or defence of their legal rights.
This anomaly might well be given attention in any current taxation review.
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