30 Mar 12 On ATO time wasting re property sales project
MEMBER 65 writes:
"Hello fellow TAXVINERS.
It is getting worse. I have a client who sold an investment property in the 2010 financial year. The gain was calculated and declared in her return 02/05/2011. The assessment for $9,000+ issued and the client arranged a repayment programme of $500 per month with the ATO.
She received on 21/03/2012 a letter from the ATO advising that they were aware that she had sold a property that may have attracted capital gains tax. They had researched the buy and sell prices and allowed an amount for purchase, sale and holding costs and advised that, in the absence of any further information, an amount that they were going to amend her 2010 return. Their estimated gain was about $3,000 less than the actual amount declared. I reviewed the client's position on the Portal to find that the only account recorded was for the tax stimulus. Apparently, when arranging a repayment arrangement, her IC and IT accounts were closed. So again we have to write to the ATO advising that the capital gain was declared and suggested they check their records more thoroughly. More unproductive and unpaid time wasted by gross ATO incompetence! Also, I notice that the new system still does not co-ordinate income tax and activity statement addresses. So much for $870 million."
MEMBER 66 writes:
"We received a letter from the ATO advising that our client appears not to have reported the sale of a property on her 2010 tax return. The letter contained financial information with regard to the purchase and sale of the property and an estimate of the taxable component of the gain. Obviously someone had put in a number of hours into the exercise; the letter also stated that the property had been sold on 9 July 2009.
We checked our files; contract date on offer and acceptance document was 25 May 2009 and we had accordingly recorded the CGT event on the client’s 2009 return. Settlement date was 9 July 2009.
If the ATO are relying on settlement dates and not contract dates, does this mean they do not know their own rules? Would it not make sense in this case and with the July date [a date so close to the start of a new financial year] to think that just maybe it's worth having a look at the previous year's return? Not only another waste of time for us to sort it out but a waste of time for the ATO personnel involved."
MEMBER 67 writes:
"Like Member 59 - see 2012 TAXVINE No 9 (23 March 2012) - I too have been receiving letters advising that the ATO is going to amend our clients' returns to include CGT re sale of property, with a calculated amount based solely on the purchase and sale price. This has entailed much annoying backwards and forwards communication to clients to get the full story, but the latest one gets my goat. It is for an ex-rental property for the 2010 year, and when I check that year, the gain has already been declared (in fact slightly higher than their estimate as I had to write back all the depreciation and capital works written off during the rental period)
Now I have to write to them and explain that they already have the gain - but as it's not exactly the same figure as they used, they haven't recognised it to be the same property! "
MEMBER 68 writes:
"I was reading last week's TAXVINE - see 2012 TAXVINE No 9 (23 March 2012) - and, in particular, Member 59's comments about the 'project' of data matching sales of property to taxpayers, when I received the letter from the ATO for a client with similar circumstances. The difference was that our client had in fact declared a capital gain for the sale of the property but the ATO had not even acknowledged that a gain had been declared.
I cannot help but think that the ATO is sending these letters in the hope that taxpayers will not seek the advice of an agent and just allow the amendments to go through and therefore collect the additional revenue.
I see no evidence of even the most basic of review by the ATO, before the automated letter was sent out. This is not an example of data matching and it would appear that it would now fall on the Ombudsman to hold the ATO accountable for their processes or lack thereof.
I suppose I should be grateful that the ATO forward the letter to ourselves and not the client."
THE TAX INSTITUTE'S TAX COUNSEL, STEPHANIE CAREDES, COMMENTS: "We are going to raise at the next ATPF meeting the issues being experienced by our Members with the ATO's project into data matching with external real estate information. We will report back to Members on this matter in due course."