MEMBER 59 writes:
"We received correspondence from the ATO on behalf of a client stating that they had sold a property in the 2009 tax year and here is our estimate of the capital gain attributable to the taxpayer. There was no reason stated as to why the ATO thought the sale should be a taxable capital gain.
I contacted the client who was less than impressed with the ATO's correspondence. I sent the Client off to find various documents. However in my quiet time I thought, well on what basis has the ATO decided that there is a capital gain?
As stated, the correspondence says nothing and I don’t want to send a reply that will effectively be a 'scattergun approach' to deal with all possibilities. So we ring the ATO. A very helpful officer takes the call. You can tell its mid-morning and he has a level of frustration. It is explained that the property was our client's principal residence. Then the officer explains the ATO has a project running on the sale of properties and it's been going since last October. Funnily, a significant number of people receiving this correspondence have been advising the ATO that the property was their principal residence.
I ask, did it not occur to somebody in the ATO that the Land Titles Office does not record as to whether a property is held for business, investment or just as a principal place of residence? Therefore why not check the address of the property to the home address on the tax return? Might be a good start. Then does the property exceed two hectares? This approach might be a bit better than, does the taxpayer have an ABN and let's go 'Fishing expedition', surely not!
It probably cost about $300 in time which I won't recover. The ATO doesn't care because its enquiry was for the purposes of the Act and it doesn’t have to foot the bill. Maybe the ATO should bear such costs!
The very helpful officer went through the whole matter with us and decided that NFA (that's No Further Action in ATO speak) was required. The only positive thing arising out of this exercise is it continued my belief that there are very willing and capable officers who do set out to be helpful toward Tax Agents and their clients.
There needs to be more lateral thinking by senior ATO management on their projects, but better still fix all your current problems rather than wanting to do the Tax Agent's job of telling a client when his return is due for lodgment ie April 2 lodgments and Super funds for May 15. Might just make everybody just a little happier."