03 Jun 1111 NTLG Finance & Investment Sub-committee TOFA Working Group – consultation on information to be disclosed on income tax returns
Tax Counsel Tamera Lang ATIA and Tony Frost FTIA (Greenwoods & Freehills) attended a special meeting on Tuesday 31 May 2011 of members of the TOFA Working Group to discuss how TOFA information should be disclosed on income tax returns. The consultation meeting arose following a submission made by the Professional Bodies on the difficulties involved in recording gross gains (and losses) as distinct from net gains (and losses) on returns. The issue is of concern to taxpayers, particularly those with high volumes of financial arrangements, because it may lead to new tax compliance burdens (i.e. they may not be able to produce gross figures; even if they could source the information, it would negate any compliance cost savings of applying Div.230). The disclosure issues are in part caused by the confusion about the way the PAYG instalment provisions operate for TOFA taxpayers. The PAYG instalment provisions, in particular the definition of “instalment income” will be amended for TOFA taxpayers, but this does not have effect for the 2010 and 2011 income years. The ATO has also expressed concern that net numbers may interfere with risk profiling, data matching and reporting requirements.
At the meeting, the Professional Bodies explained the joint submission and gave more details on the specific difficulties that taxpayers, particularly financial institutions, will have in meeting the ATO’s information requirements. The ATO set out their concerns about making sure that quarterly PAYG instalments, which are calculated based on certain labels from a tax return, are calculated accurately. All participants agreed that it is essential for the amendments to the PAYG instalment provisions to be enacted as soon as possible, and this urgency has been expressed to Treasury.