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23 Sep 11 ATO targets non-taxable pensions for undisclosed income

MEMBER 175 writes:

"Some pensioners are robust while others are vulnerable.

My client is vulnerable & is fearful of the ATO so insists on lodging an Income Tax Return even though there is no legal requirement. Since retirement she has always been non-taxable & well below the SATO threshold.

The ATO discovered that she has undisclosed interest income - true. Even including the omitted income, she is still non-taxable. In fact, she could have earned a further $6,500 & still be non-taxable. Such was our leeway. Why is the ATO targeting the vulnerable? At least my client has me to intervene but any money saving, self-preparing & non-taxable retiree should not be subjected to this intimidation.

The ATO advised that no penalty will be imposed but we are threatened with penalty should the full income not be disclose in future.

Firstly, with the threat of penalty for future omissions of interest for non-taxable clients, do we need to be so pedantic with non-taxable pensioners that we must never be > $1 in error? This is not practicable when low income pensioners are regarded as community service for my practice.

Secondly, & most importantly, why is the ATO using resources to chase undisclosed income when no extra tax will be generated for the ATO?"


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