Making it easier to comply 2005-06

2.2. Practical compliance improvements

Working closely with professional associations involved in one of our peak advisory groups, the National Tax Liaison Group (NTLG), the Tax Office is examining procedural requirements to ensure they are not unnecessarily onerous and do not impose costs that are disproportionate to the scale of a transaction.

As with streamlining transactions and improving the self assessment system, this program of work addressing practical compliance issues seeks to align tax administration as closely as possible with existing community and business practice. For example, we aim to avoid imposing tax-specific requirements for collecting data, maintaining records and reporting financial information if the needs of compliance can be met through established accounting practices.

The program of work addresses issues raised in consultative forums as well as our day-to-day work in compliance and education. Priorities are set by an NTLG sub-committee based on issues identified through professional associations and our industry partnerships. In developing solutions we ensure that:

• the approach is consistent with the policy intent of the law
• we achieve compliance at reduced cost
• as far as practical, the approach reflects industry practice
• any resulting risks to the revenue are appropriately managed
• adverse impacts on third parties are avoided, and
• taxpayers are able to choose whether to adopt the approach or not.

The solutions are communicated through a range of products including a dedicated series of practice statements.

If an administrative solution is not possible, the issue is returned to the NTLG for further consideration. Where appropriate, it will be referred to Treasury as a proposal for a possible legislative solution.

Practical compliance issues fall into two broad categories:

• the need for flexibility in timing requirements in relation to procedural events (such as making elections and other choices), and
• the need to recognise and align with community practices (such as recognising that taxpayers no longer always receive a traditional receipt and accepting alternative forms of documentary evidence to substantiate claims for deductions, where appropriate).

For details of the program of work in 2004-05 and our plans for 2005-06, see appendices 4.2.1 and 4.2.2.

Sections within 2. Progress and plans

• 2.1. Improved information and transaction products
• 2.2. Practical compliance improvements
• 2.3. Improving the self assessment system