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In response to Member 181’s concerns expressed in last week's TAXVINE  and to a number of other queries the ATO has received on this issue, the ATO provides the following comments:

"The ATO is receiving queries in relation to family income testing and the inclusion of spouse’s income details in the tax return.

Family income testing has been used for a range of tax obligations, concessions and government benefits for some time. This year family income testing was extended to the net medical expenses tax offset and private health insurance rebate; and changes were also made to how Medicare levy surcharge is calculated. To accurately assess these entitlements or liabilities it is necessary to ask individuals to provide information about their spouse's income in their tax return.

On the ATO website there is broader information on the assessment of family income threshold when determining eligibility and calculation of a number of offsets, benefits and obligations.  This information includes specific details on “Do I need to include my spouse's income in my tax return?” and “What if I don't know my spouse's income?”

The ATO’s website acknowledges that in some circumstances it is difficult for tax agents to accurately complete the spouse's income details on the income tax return.  If you or your client don't know the spouse's income details, you should provide the best estimate possible.

When the ATO finds an error or omission, they take into account the client’s relevant circumstances, including compliance history, when deciding what action to take, particularly for any penalties or possible prosecution action. Relevant circumstances include the reasons for the discrepancy or failure, and how well the taxpayer has complied with their tax obligations in the past. The ATO also considers your client’s attitude towards complying with the tax laws.

If your client has acted reasonably and in good faith, the ATO will not charge interest."