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27 Mar 09 On removing social welfare from the tax law

MEMBER 3 writes:

"I am disappointed to find that the Taxation Institute actively pursued the removal of FTB from Taxation. It would appear that the Institute is moving from what a true professional person is about. I find it hard to believe that you can applaud your efforts in depriving taxpayers of their tax agent’s advice and help in regards to FTB and CCB when preparing their annual taxation returns."

TAXVINE COMMENT: The Taxation Institute's Senior Tax Counsel, Dr Michael Dirkis FTIA, responds to Member 3's comments:

"Thank you for raising your concerns with the Taxation Institute.

The Taxation Institute has opposed for over 10 years the use of the tax system for the delivery of social welfare on a number of policy grounds, including simplicity, horizontal equity, etc. The introduction of FTB muddied the tax rates such that it has become almost impossible to deliver any change in tax rates. The result is that so called tax rate changes are delivered via increases in social welfare. The view is based upon concerns raised with the Taxation Institute by many its members since the introduction of FTB. These members do not have or want involvement in their clients’ FTB affairs. The removal of the schedules from the return forms simplifies life for the vast majority of practitioners.

This view is also shared by the major accounting bodies.

Given this majority member view, the Taxation Institute’s position, which has been clearly set out in TAXVINE (since its inception) and submissions (over the last 10 years), has been clear and should not be a surprise to members.

That said, the change merely restores responsibility for the administration of the lump sum FTB and wash ups with Centrelink (ie merely the agency handling the matters has changed). Full service agents who handle FTB and pension matters on behalf of their clients (as you do) are not restricted from continuing to support and advise clients on these matters. All that will happen from 1 July 2009 is that all those social welfare matters are being handled by the one agency. Therefore, you will only need to deal with Centrelink rather than both the ATO and Centrelink.

Issues associated with transition are currently under discussion with the ATO."

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