21 May 1010 On optional standard deduction for WRE and managing tax affairsMEMBER 164 writes:
I note with great dismay the 'official' statements issued over the past few weeks to do with tax return simplification. I acknowledge that sometime in the future and left to their own devices the government of the day may actually attempt to implement 'simpler' tax returns.
However I am deeply affronted to find that my Institute is actively promoting this objective which is absolutely against my interests and those of my employees.
I have been a successful practising tax agent for some 28 years following a successful corporate accounting and finance career of 30 years and during most of that time I have happily been a member of the Institute. I am no longer happy about my membership.
The introduction of simpler tax returns or their elimination will reduce the revenue of my practice by about 30% and will cause me to have to reduce my staff by 2-3 accountants some of whom are also members of the Institute.
It should not be the role of my Institute to actively promote the reduction of my income and thus cause me to dismiss good and valued employees.
Reference to the many contributions to Member Feedback over the past 6 weeks or so should allow the executive of the Taxation Institute to fully understand just how many Members rely on I returns for some of their income.To assume that income can be easily replaced by quickly 'selling' clients alternative accounting services that they do not need is naive to say the least.
Fortunately I am only to well aware of the great inadequacies within and the mismanagement of the ATO which leads me to believe that it will be incapable of successfully implementing a simpler or nil personal tax return regime.Only last week we had another example of an error in the Interest audit program and that is some 30 years after it was introduced!
To call the simplification announced in the budget effective is a joke. The $500 merely replaces the $300 already in existence and the tax agent fee."
TAXATION INSTITUTE President, David Williams, replies to Member 164:
As a general proposition, the Taxation Institute is in favour of the simplification of the Australian taxation system.
In this regard, the Taxation Institute of Australia supports the Budget announcement that the Government will make it easier to fill out tax returns by offering taxpayers an optional standard tax deduction and calls for the Government to continue along the path of providing ongoing simplification.
The optional standard deduction of $500 from 1 July 2012, increasing to $1,000 from 1 July 2013, will automatically apply where the taxpayer is unable to verify work-related expenses and the cost of managing tax affairs exceeding that amount.
However, according to the latest ATO statistics, the average claim for work related deductions in 2007-08 was $1,951.
The Taxation Institute believes that most clients, therefore, are likely to continue to use an agent to ensure that they are claiming the maximum deduction and are completing their forms correctly.