14 Jul 06 On the new Industry CodesMEMBER 1 writes:
"We have just completed the first of our Tax Returns for 2006. We were horrified to discover that all the Industry Codes have been changed. On our electronic lodgment program we discovered that it would not "validate". Ultimately we found that the codes had changed. We then discovered that on another client that did "validate", that last year’s number had been allocated to a different industry!
We understood that the ATO codes were to be identical to that of the ABS. I can guarantee that there will be a significant number of errors on coding this year. It is a field in the computer that is never checked once it is input correctly.
Why? Who thought this out?"
TAXVINE COMMENT: Dr Michael Dirkis, the Taxation Institute's Senior Tax Counsel, replies:
"The Australian Bureau of Statistics (ABS) on 28 February 2006 released a new standard that has been updated to “better reflect contemporary and future industries, and to ensure a high degree of compatibility with other major international classification standards”. The ATO has had to adopt that code.
The Taxation Institute did warn members of the changes to the Business Industry Codes in TAXVINE last year (see 2005 TAXVINE No 49 (19) (16 December 2005)). This followed an item on the ATO's website released on 13 December 2005 in which the ATO advised of the changes and the tax forms that would be affected. In the ATO's satellite Tax Seminar Book for June 2006, the first section of the book, which lists Tax Time Changes, also advises of the change to Business Industry Codes.
I understand that concerns about the impact of these changes upon agents have been raised with the ATO as late as April 2006, with little response.
Following on your concerns I have raised with the ATO the following three questions for discussion at the 27 June 2006 Lodgment Working Party meeting:
a) As this is the first year of the application of the new Business Industry Codes, what accommodation will the ATO to tax agents' lodgment programs to allow tax agents to adjust their clients tax returns for the new codes, particular where a taxpayer's initial lodgment is rejected on the basis of an incorrect Business Industry Code?
b) What additional messaging is being done (or can be done) to alert agents of the changes?
c) What steps will the ATO take to identify whether old business industry codes have been reassigned to different industries? And if so, what impact will this have on the accuracy of information collected by the ATO?
I will report on the outcome in TAXVINE.
Thank you for raising this issue with the Taxation Institute. It is only with such member feedback that we attempt to seek resolution of issues adversely effecting members' practices."