27 May 11 ATO Tax Practitioner Forum
Tax Counsel Tamera Lang ATIA represented The Tax Institute at the meeting of the ATO Tax Practitioners Forum (ATPF) last Friday 20 May 2011.
The ATO a led a number of important presentations, the first of which covered the “Aggressive Tax Planning – key intermediary engagement strategy”. The ATO is aiming to strengthen the internal control and governance processes within “key intermediary entities” to enhance awareness and management of the promoter penalty provisions. Key intermediary entities include accounting firms and tax agents, and it is hoped that improved communications with this group will assist in the awareness and detection of high risk conduct. The ATO has produced a publication “Good governance and promoter penalty laws” which provides information on the ATO’s risk management approach and explains how the promoter penalty laws operate. The guide sets out a comprehensive list of schemes and behaviours which currently concern the ATO. The Tax Institute highly recommends that all members read the guide, which is available on the ATO website. If you have comments or concerns with the content of the guide, please contact us at Tax Policy.
The ATO gave a comprehensive briefing on the approach to TaxTime 2011. The ATO has agreed to establish a special working group of representatives from various professional bodies to meet weekly (later moving to fortnightly) to discuss the progress of TaxTime 2011. These teleconferences will allow the professional associations to alert the ATO to issues being experienced by members; it will also allow the ATO to communicate any system difficulties they are experiencing and how/when they intend to resolve them. This is an important working group, and The Tax Institute will be encouraging members to report their experiences of TaxTime 2011 so that we can keep the ATO abreast of issues if/when they emerge.
The ATO gave the group an overview of how tax returns are processed in the new Integrated Core Processing (ICP) system. This briefing included a description of the ICP automated processes that occur, and what triggers can cause a tax return to be placed “in suspense” (and thus cause a delay due to manual intervention being required). The four most common reasons for suspension are: surname mismatch, address mismatch, awaiting on Centrelink data exchange information, and information attached to the tax return form. Tax agents are encouraged to ensure that all name, address and date of birth details are correct prior to lodgement, as this assists with the smooth progression of returns through the system. The ATO presentation included information on the visibility of transactions/processing details on the Tax Agent Portal as a tax return works its way through the ICP. We have encouraged the ATO to publish this information on its website, as it will assist agents to understand the messages they are given through the Portal, and to be able to judge the progression of their clients’ returns.
The Tax Institute recognises that each year’s TaxTime is an extremely busy time for our members, and that any ATO system problems greatly increase the pressure on agents. We encourage members to come forward with specific details of problems they are experiencing, so that we can work with the ATO to resolve them.
The Tax Institute and other professional bodies raised our concerns about letters that practitioners have recently received suggesting that certain taxpayers may not be eligible for the Education Tax Refund (ETR). The letters have been sent where a taxpayer was “entitled” to receive Family Tax Benefit Part A, but did not in fact claim that benefit. The ATO provided a technical analysis of the relevant provisions of the Act (please contact us at Tax Policy if you are interested in this detail). Their preliminary conclusion is that to be eligible to claim the ETR, a taxpayer must have lodged a claim for Family Tax Benefit Part A for a child and have had that application approved. The ATO acknowledged that the eligibility criteria and related family assistance laws are complex, and has temporary suspended the letter campaign to determine its approach to the remission of penalties and/or shortfall interest charges. The ATO also undertook to refer the matter to Treasury, to determine whether the interpretation of the eligibility criteria reflects the policy intent of the measures.