Publication date: 14 Jan 04 |
Source: THE TAX INSTITUTE
'Do you have a foreign bank account? If so, time is running out,' states Neil Earle, Senior Vice President of the Taxation Institute of Australia.
Mr Earle points out that this New Year's gift from the Government could be bad news for people having even minor amounts of money in any foreign bank account.
'From 16 January 2004, the tax man will expect you to calculate any foreign exchange gains or losses on every deposit or withdrawal from that account, regardless of how much money is held in the account, unless you do something now,' warns Mr Earle.
'The new foreign exchange rules, only became law on 17 December 2003 but have retrospective operation from 1 July 2003. If you have less than AUD$250,000 in a foreign bank account, you can avoid the operation of this rule if you put into writing by 16 January 2004 your wish that the account be exempted, and keep that document as evidence of your election,' he advises.
'This is just one of a number of elections (some irrevocable) required under these new rules that must be undertaken by 16 January 2004. Failure to do so will result in huge, on going accounting costs for those businesses and individuals affected,' says a concerned Mr Earle.
'An example of these ludicrous timeframes in relation to these new requirements is, if an individual with as little as NZ$500 or UK₤10 in an overseas bank account fails to make an election, he or she will be required to work out the foreign gain or loss on every deposit into or withdrawal from that account back to 1 July 2003. The calculation also requires you to know what the exchange rate was at the time of that withdrawal,' he continued.
The Taxation Institute, via written correspondence on 21 November 2003, has expressed its disappointment to the Government in regards to the unrealistic window of opportunity in which to make these elections.
'It (the due date) falls in the peak holiday season of the year and is likely to result in non-compliance by large sections of the community. Surely the Government could provide a more realistic timeframe for Tax Practitioners and as per the Institute's written suggestion postpone the operation of the law until 1 July 2004,' states Mr Earle, 'No Australian who is on holiday with their family is going to be thinking about tax or booking in with their accountant, let alone thinking about how some complex rules, they have never heard about, will impact on their foreign account.'
'At this time of the year, 30 days to understand, comprehend and determine which clients are affected by the 123 pages of complex tax legislation is impossible for any tax adviser, let alone the average Australian,' he noted.
'The Government has failed to heed the Taxation Institute's warnings, and what should be of major concern to all Australians - widespread non-compliance with the tax system,' concluded Mr Earle.