20 Apr 1212 On ATO foreign income letters
MEMBER 92 writes:
“Here’s a doozy for you. Not sure if there have been any other members reporting this happening or not?
I received two letters, one each for a husband and wife who are clients, requesting information on $150k transferred to Australia from the UK back in 2008. These funds were related to the sale of their PPOR in the UK which was sold just before they relocated to Australia. Unfortunately they’d lost all their paperwork needed to prove this in a flood, so they had to get information sent across from the UK. I notified the ATO of this and the anticipated date they might receive said paperwork, but the ATO still went ahead and lodged an amendment without waiting. This is not my issue though – my issue is that they amended both taxpayers’ returns for the FULL amount that was transferred – so $150k each (a total of $300k), when only $150k came into Australia. This is regardless of the fact that I had explained to them that the money was for the sale of a PPOR, and that it was a joint bank account. Obviously, I assumed this was just another ATO error so I called the relevant department to try and fix it, but I was told by the ATO employee that there was no error as ‘this is how we deal with it because we don’t know who the amount belongs to, so we amend both taxpayers’. I was dumbfounded, to say the least. Surely it’s illegal for the ATO to collect tax on money that doesn’t even exist, so I planned on going to the Ombudsman to complain.
When the clients received their paperwork from overseas I contacted said ATO department again to let them know I would be faxing it through. I thought I would try my luck with posing the question to this ATO employee about the double-taxing and see their response before I finalised my letter for the Ombudsman. Well, surprise, surprise, but it was an error. The initial employee I spoke to was either incompetent or just trying to cover up a major stuff up on the ATO’s behalf. Needless to say, I made it pretty clear that they have a major issue with their systems if something like this can happen, and my mentioning the ‘ombudsman’ word obviously had an effect, because within two hours the clients’ amendments had been reversed in full and the manager of the ATO department contacted me directly by phone to apologise for the error. Upon discussions with him it appears that the ATO are only advised by AUSTRAC of amounts that come in and the taxpayer concerned, but they don’t get any information on whether the account is a joint account or not. Ummmm, well then, wouldn’t you think they would have put something in place to prevent this from happening? And hang on, I thought their magnificent new computer system would prevent all errors from ever occurring at the ATO again.”