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27 Jan 12 On dealing with the ATO (Part 2)

MEMBER 2 writes:

"This week I have the opportunity to speak with an ATO representative reviewing a tax return lodged months ago. We had escalated this return a number of times and finally managed to have someone review it. The taxpayer was a member of a partnership and the business was sold during the year. As such the partnership had a capital gain component and an income component, both of which were in the individual tax return, but in different areas (as they are meant to be). The lady I spoke to was very pleasant but could not understand how this could be - she was not a tax agent so did not have the knowledge about such matters. I completely understand that this is a little complicated and was happy to explain it to her. However, I ask the question - why is she reviewing my work!!!

And on another matter - has anyone had a call on benchmarks relating to restaurants and cafes? There is a benchmark for restaurants and a benchmark for coffee shops (different in percentages) yet there is no ANZSIC code for coffee shops. The closest code (and I checked this with the ATO) is Restaurants and Cafes. So my client spent 45 minutes on a phone interview trying to explain why her cost of sales were not in the correct range (for a restaurant) only to find they were spot on for a coffee shop (which is what she has). I suggest we all review the codes we are using and be ready to answer the ridiculous questions being asked - as the ATO seem to be assuming guilt in their approach to this 'project'."

THE TAX INSTITUTE'S TAX COUNSEL DEEPTI PATTON COMMENTS: "The Tax Institute is aware of ongoing concerns with the ATO's use of benchmarks. We will again be raising these issues with the ATO at the next ATPF meeting in February 2012 and will keep members updated on the ATO's response.

We will also be making a submission to the Inspector-General of Taxation in relation to his review into the ATO's use of benchmarking to target the cash economy. Members who wish to contribute their experiences for inclusion in this submission (on a confidential basis) are encouraged to contact us at TaxPolicy"


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