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07 Nov 14 More on the 85% lodgment requirement

MEMBER 175 writes:

"Well, now that 31 October is behind us, it seems that I can forget trying to build my practice until next July. Why? Because I will be unable to meet the on-time lodgment requirement for any clients that I add after 31 October unless they are seriously delinquent (i.e. prior year returns outstanding). I have been told by the ATO that I am not permitted to obtain a lodgment extension for new clients unless they were on my lodgment list by 31 October. Now we have the 'concession' under which we can ask for a current year lodgment extension for taxpayers who have prior year returns overdue.

The 85% requirement makes it virtually impossible to build a practice. I need to protect the lodgment due dates for my current clients and not risk those by taking on new clients after 31 October. Thanks ATO. If this requirement had been in place 3 years ago when I started my practice, I would have seriously reconsidered my investment in setting up as a tax agent. 

There are many legitimate reasons why a taxpayer may want to appoint a tax agent after 31 October, eg. they are moving interstate and need to change tax agent, they arrived in Australia during the year and only now realise we have a June year end, they realise when trying to wade through e-tax that their tax affairs are more complex than last year so need to appoint an agent for the first time, a new business commenced during the year, a business' in-house tax preparer has left, etc. 

Regardless of this, I have to turn such potential clients away so that I can ensure I will pass the magic 85% requirement. Surely the ATO should be encouraging taxpayers to appoint a tax agent to get their tax returns done correctly. Here's a constructive suggestion - offer an automatic lodgment extension for any taxpayer appointing a tax agent for the first time or changing tax agent. I'd like to see the ATO provide us tax agents with a carrot for once, rather than a stick."

TAX COUNSEL THILINI WICKRAMASURIYA COMMENTS: At the meeting of the Lodgment Working Group on 8 October 2014, members continued to raise concerns about the treatment of clients with prior year returns outstanding impact on their statistics under the Lodgment Program Differentiation Framework. The ATO indicated that it will make deferrals available to manage new clients with prior year returns outstanding through an updated deferral request form due to be released this month.