As noted in last week’s TaxVine, Tax Counsel Tamera Lang ATIA attended the ATPF meeting on Friday 20 May 2011. In addition to last week’s report, we would like to update members on several important issues that have been discussed at ATPF (both at the meeting and out-of-session).
HELP/SFSS statements: The ATO has advised that it will be issuing HLP/SFSS statements for the 2011 income year to taxpayers, reversing an earlier announcement that statements would not be automatically issued. This news was welcomed by the members of the ATPF. It will mean that taxpayers should have the information ready for the upcoming TaxTime, and will be able to assist agents in the preparation of tax returns.
The Professional Bodies’ representatives at the ATPF advised the ATO that whilst the decision to continue to send the statements was welcomed, it would be better if the statements were provided to agents, and also had more detail on the transactions that occurred during the year (i.e. not simply a balance of the relevant loan). It is understood that the ATO will consult with the ATPF prior to a decision being made on the administration of these statements for the 2012 income year.
Proof of identity (POI) changes: As members are aware, the ATO has recently updated its POI procedures (for details, see the ATO website). The changes have been triggered by concerns about the security of taxpayers’ and agents’ information. Concerns have been raised about using tax agent registration numbers for identification purposes following the Tax Practitioners Board’s decision to publish tax agent registration numbers on its website. The primary concern is to ensure that taxpayers’ information is secure and cannot be accessed by persons who are not authorised to do so.
The private sector members of the ATPF have stressed the importance of balancing security concerns against the inconveniences and costs involved for agents in meeting the revised requirements. It is hoped that the requirement to provide details of an ATO notice or return from the last 5 years should offer sufficient ability for agents to record relevant information on their system which can then be used to satisfy POI. The ATPF members have been involved in finessing the communication of the new requirements, including providing feedback on the fact sheet that will be provided to agents.
Small business benchmarks: the cash economy audits and small business benchmarks have continued to be a “hot topic” at the ATPF. The Tax Institute has raised members’ concerns with the ATO on a number of occasions. These concerns include how contact is made with taxpayers (i.e. whether made directly or via an agent – the latter being strongly preferred by The Tax Institute) and the type/amount of information that is requested.
The ATO has advised that when it conducts a visit to a taxpayer, audit or phone review, the procedure is that compliance officers should address their queries to the registered tax agent where the business owner has nominated that agent as their contact. There may be some cases, generally in lower risk situations, where a letter is sent directly to a taxpayer inviting them to review their reported figures and voluntarily correct any errors. The ATO has advised that where direct contact is made with a taxpayer, a letter is sent to the tax agent (noted as a contact) one week in advance of the letter to the taxpayer, and that the same information is sent to both taxpayer and agent. This should ensure that the tax agent is aware of the contact being made with their client. The ATO advises that this procedure has been adopted because direct contact with business owners has been found to be effective in changing compliance behaviour where income is being under-reported.
TFN report for closely held trusts change to lodgement date: following consultation with The Tax Institute and other Professional Bodies, the ATO has announced that it will make a further extension to the transitional arrangements for lodging TFN reports for closely held trusts. Under the existing transitional arrangements, taxpayers who have an obligation to lodge a TFN report for the 2010/2011 year have the option of doing so when lodging their 2010 trust income tax return or by lodging a new TFN report by 31 July 2011. The extended arrangements will allow the TFN report for the 2010/2011 year to be lodged any time up to 31 August 2011. Tax agents that lodge electronically will have a further deferral to the due date of their client’s income tax return, provided they lodge the TFN report and the 2011 income tax return (and all future income tax returns) electronically. The new TFN Report will be available (via both ELS and paper) from 1 July 2011. The ATO has made it clear that this is a special concession to recognise transitional difficulties, and normal due dates will apply for all future TFN Reports.