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20 Apr 12 On CGT non-reporting “review” letters

MEMBER 94 writes:

“Received one of the standard ATO letters stating that a capital gain may have been made and not reported on the sale of a property in the 2008-2009 year.

Among other accusations was the one about ‘You were unaware that you made a capital gain and unintentionally omitted it’.

Trouble is they were looking at and sent the letter to the trustee company and with the trustee company’s TFN. The property was owned by the said company in its capacity as trustee for a Family Trust.

The taxpayer (the Trust) was well aware that a capital gain had been made and DID NOT omit declaring it – it was declared in the return of the taxpayer that made the capital gain and had reported its share of rental income on this property as income over the previous 2 years.

After spending a week trying unsuccessfully to fax a reply to the fax number on the letter and phoning the ATO officer who was not in the office for the week (it appears that one can’t send a fax if the officer is not in the office) the investigating officer finally did return my call.

I questioned whether the officer knew the difference between the trustee and a trust, which she claimed to. I then questioned why the trust involved wasn’t checked to see if a capital gain had been declared before sending out the accusation of wrongdoing letter.

The officer claimed that their system doesn’t show who the trustee is for a trust, to which I replied, why then do we have to show the trustee details on the front cover of the trust return? Her reply was that most agents don’t include the trustee details, to which I replied that trust returns won’t validate and cannot be lodged ELS without the trustee details being completed. The response was: ‘Well, I don’t know about that’.

So the big issues here are:

  • ATO not doing their job properly and sending out wrong ‘accusation of non-declaring Capital Gains’ letters and causing taxpayers and their agents grief and wasted time and cost in responding (we know that no response will lead to amended assessments being issued!)
  • ATO staff being incompetent and even lying about most trust returns not having trustee details shown
  • either the ATO’s systems are grossly inefficient in not recording the trustee details that are required to be shown on trust tax returns or their staff are incompetent or untrained.

If any of my staff was that incompetent or lied to try and bluff their way through a situation they would not be on my payroll for very long.

If the ATO want details of the staff member involved to take corrective action or re-training I can be contacted through TIA to provide their name, direct extension number and matter reference number.”

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