Introduction
GST which stands for goods and service tax is a form of value added tax and it is one of the most significant tax in Australia which was commenced on 1 July 2000. The essay aims to explain the issue that how the GST system guarantee that GST is actually paid by the final customer. Through analysing the legislation, A New System (Goods and Services Tax) Act 1999, it can be concluded that the GST has a neural effect on business-to-business transactions and that only the ultimate customer pay for the GST.

The registration of entities is the basis of the goods and services tax (GST) system. According to section 23-1 GSTA, only these entities which are carrying on enterprise can be registered. The enterprise is defined in the section 9-20, which consist of activities done in form of business or in form of an adventure or concern in the nature of trade. These rules indicate that the ultimate customer, who is not carrying on enterprise, cannot be registered in the GST system. For these entities which are carrying on enterprise when entities’ GST turnover reach the registration turnover threshold, that is$75,000 ($150,000 for non- profit entities), they are required be registered by section 23-5 and 23-15 GSTA. It means that the small business is able to choose to be registered or not. The GST system only works on these registered entities except importations. According to the section 13-1GSTA, GST is payable on taxable importations regardless whether or not the entity is registered. Therefore, GST system works on registered entities and importation.

GST operates in a way that registered entities that make “taxable supplies” must pay GST at the rate of 10% on the value of taxable supplies, section 9-40 and 9-70 GSTA. Section 9-75 GSTA said that the value of taxable supply is the 10/11 of the price. So, when customers purchase goods and services which classified as taxable supplies, they paid GST at amount of 1/11 of the price to their suppliers. GST-free and input tax supplies are not charged with GST. Section 13-15 GSTA requires entities to pay GST on their taxable importations. It is means that customers pay GST included in the price of goods and services when they buy things that are regarded as taxable importation. Therefore, customers, regardless which stage they are involved in the supply chain, pay GST in the price of goods and services which are classified as taxable supplies or taxable importations. Then the GST system charges GST payment from entities which provide these taxable supplies and taxable importations.

Creditable acquisition is an essential part of the GST system for ensuring the final customer to be charged with GST. According to section 11-5 GSTA, when the registered entity, required or voluntary, acquire anything solely or partly for a credit purpose from a taxable supply and provide or are liable to provide consideration for the supply, it make a creditable acquisition. The rule classifies these business purchases made by registered entity for carrying on enterprise, such as inventory and raw materials, as creditable acquisitions. The section11-20 GSTA gives the registered entity the right to get the input credit for any creditable acquisition made by the entity. The section15-15 GSTA permits entities to claim input tax credits for their creditable importations. For manufacturers, they can claim input credits for GST payment included in prices of raw materials purchased. For retailers, they can claim input credits for inventories purchased. These input tax credits offset the GST payable which entities collected from customers through taxable sales. In other words, they only pay the GST by the amount that collected from the next customer through taxable supplies or importations deducting the input tax credits which represent GST they paid through creditable acquisitions. So the registered entity which involved in business-to-business transaction will not pay GST itself. Only the final customer, who cannot be registered and cannot claim input tax credits, pay the GST when purchases goods and services that are taxable supplies or taxable importations from registered entity. As the GST system only works on registered entity and entities providing taxable importation, customers will not pay GST when buy goods and services from unregistered entity not providing taxable importations. When the unregistered entity occurs in the middle of supply chain, it is still final customer burden the GST. In above situation, the entity which purchase from the unregistered entity will not pay GST and also cannot claim input tax credits. When these entities make taxable supplies or importations, the GST payable is paid by the final customer who pay the price that including GST. Therefore, for these entities are not the final customer in the supply chain, input tax credits gained by entities from creditable acquisition neutralize the GST payable generate through providing taxable supplies or taxable importation. The cost of GST is borne by the final customer who cannot be registered and cannot claim input tax credits.

Conclusion
The issue how the GST system is designed to ensure that the final customer bear the cost of GST is solved by analysing the legislation which describing how the GST system works. The GST system by a way that imposes GST on taxable supplies and importations to both final customers and intermediate suppliers but then allows registered entity or importers recover GST by claiming input tax credits. Then the final customer who cannot claim input tax credits burden the cost of GST.

Bibliography
Barkozcy, S. (Ed.).(2013a). Core tax legislation & study guide (16th ed.). Sydney: CCH Australia Limited.

Barkozcy, S. (Ed.).(2013b). Foundations of Taxation Law (5th ed.). Sydney: CCH Australia Limited

Krever, R. E.(2013) Australian taxation law cases 2013: a guide to the leading cases for commerce and law students. Sydney:Thomson Reuters. Thomson Reuters (2013), Australian GST Handbook 2012-13, Sydney:Thomson Reuter.

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[ 1 ]. Thomson Reuters, Australian GST Handbook 2012-13, Thomson Reuter, 2013.
[ 2 ]. Krever, R. E. Australian taxation law cases 2013: a guide to the leading cases for commerce and law students, Thomson Reuters, Australia, 2013.