The Chair commenced the discussion by providing an update of the tax bonus for working Australians.
- The High Court has ruled that the Tax Bonus for Working Australians Act passed by Federal Parliament in February is valid under the constitution.
- The Tax Office commenced issuing tax bonus payments on 6 April 2009.
- The Tax Office recognises the increased of workload that may have placed on tax practitioners in distributing the tax bonus. The Tax office has provided various measures to minimise the impact on tax practitioners, such as the ability to 'opt-out'.
Members' questions
Question 1
With the current government's 'Tax bonus for working Australians' and the support from the Tax Office for tax agents and their clients, we have one problem. It appears we cannot update our clients' bank account details on the portal, yet we can do this for their income tax returns lodged via the electronic lodgment system (ELS), in addition we can do it on the Tax Agent Portal (the portal) for 'activity statements' but not for income tax on the portal. Why?
Tax Office response
The tax agent portal does not have the functionality to update bank account details for income tax purposes. Income tax returns cannot be lodged through the portal whereas activity statements can. The portal does not hold information in relation to income tax returns and therefore it is not possible to update bank account details through the portal.
Meeting discussion
A member indicated that details can only be updated at the time when the tax return was lodged. It is not possible to update the details after the lodgment.
The Chair advised the Tax Office recognises the shortfall of the portal. It is likely that there will not be any changes made to the portal for another 12 months due to the change program. The Tax Office is currently evaluating the functionalities of the portal so improvements can be made in the future.
Question 2
At present, there is a 30 June deadline for the lodgment of 2008 tax returns if a taxpayer wishes to receive the tax bonus provided that the income test is satisfied. With more than 75% of all tax returns being lodged by tax agents, there are going to be a lot of clients' tax returns not being lodged by 30 June. There will be a lot of desperate clients coming in late wanting to have their 2008 tax returns lodged by 30 June and a reasonable sprinkling of clients who need to have multiple tax returns prepared for them. According to the Tax Office fact sheets, there are very limited reasons where an extension of time to lodge beyond 30 June will be granted. One in particular was to need to apply for an extension of time to lodge during the period prior to royal assent. This period of time was very limited. Due to the expected heavy workloads on tax agents and the inability to employ suitably qualified staff, for the purposes of the tax bonus, what is required to seek a closing off date after 30 June, say three months?
Tax Office response
Subparagraph 5(1)(e) of the Tax Bonus for Working Australians Act (No.2) 2009 specifies that to be eligible for the tax bonus payment:
The person lodges his or her income tax return for that income year no later than:
Unless subparagraph (ii) applies - 30 June 2009; or
If, before the commencement of this Act, the Commissioner deferred the time for lodgment of the return under section 388-55 in Schedule 1 to the Taxation Act 1953 to a day later than 30 June 2009 - that later day.
As royal assent of the Tax Bonus for Working Australians Act (No.2) 2009 was granted on 18 February 2009, therefore any deferral requests granted after this date to a date later than 30 June 2009, which valid, would not make the individual eligible for payment of the tax bonus.
However, the Commissioner announced arrangements to defer certain lodgments to assist with unexpected misfortune and tax agents' workloads in the tax practitioner broadcast of 18 February 2009. These arrangements include:
Clients that are affected by 'unexpected misfortune' will be granted a deferral for lodgment of the 2007-08 return until 30 June 2010.
A general lodgment and payment deferral for all unlodged 2007-08 income tax returns from companies, partnerships, superannuation funds and trusts with a lodgment date of 15 May 2009 to a new date of 5 June 2009.
Due to the constraints of the legislation, Tax Office is not able to extend the lodgment deadline beyond 30 June 2009.
Meeting discussion
A member indicated that the tax bonus advertisement was not clear as to who is entitled to the tax bonus payment. This lack of clarity generated a lot of enquiries from his clients.
Another member said his practice is under pressure as many taxpayers want to lodge their income tax returns now to be entitled to the tax bonus payment. Due to limited resources, the firm has to consider whether to accept new clients. But given current economic conditions, it is a tough commercial decision.
One issue raised was that a number of clients from one firm phoned the Tax Office for tax bonus advice but were told to contact their tax agents.
A member pointed out that a taxpayer's entitlement of tax bonus is affected by whether the taxpayer claimed the private health fund rebate as a reduction in the private health insurance premium through the health insurer or as a refundable tax offset at the end of the income year through the tax return and whether dividends received are franked or unfranked.
The Chair indicated that some taxpayers on the surface may be entitled to the tax bonus but after taking into accounts tax offsets and dividend income, they may not have an entitlement.
The Chair indicated that the Tax office is aware of the implications certain tax offsets have on the entitlement to the tax bonus. As it is a government policy issue, members can raise any concerns with their local federal members of parliament or through their associations.
The Chair indicated that the Tax Office recognised that there will be taxpayers who have multiple years outstanding which will place pressure on tax practitioners. Tax practitioners should advise taxpayers that there is no guarantee that returns can be lodged by the entitlement date if taxpayers approach tax agents at the last minute.
Members indicated that as payments have already commenced, their concern now is how the Tax Office handles the process. Members indicated that it is likely there will be payments bounce back or payments that go to the wrong address. Members would like the Tax Office to provide information regarding the process at the next meeting.
A member raised the issue of whether the Tax Office will re-issue the cheque if the cheque becomes stale after 12 months.
Action item
|
NSWRTPWG 0904/01
The Tax Office to provide a report on the tax bonus payments at next meeting.
|
Responsibility
|
Pierra Lee
|
Action item
|
NSWRTPWG 0904/02
The Tax Office to provide a response on the issue of whether the Tax office will re-issue the cheque if the cheque become stale after 12 months.
|
Responsibility
|
Pierra Lee
|
Sections within Agenda items
Last Modified: Monday, 19 April 2010