Tax Time 2012 - what you need to know
Tax Time 2012 - what you need to know
We are continuing to work with you and your professional association representatives to make sure you have the support and information you need during the busy tax time period.
During Tax Time 2011, we saw a reduction in the proportion of returns containing errors in relation to the completion of client details, which unnecessarily delay the finalisation of your clients' returns. Thank you. For our part, we will try to provide you with the information and tips you need to help this downward trend to continue this year.
The following information outlines how we will operate during tax time and includes tips and reminders to help you make sure your clients' tax returns are processed without unnecessary delay.
If there is more we can do to help you, please provide us with your ideas through your representative body, or by phoning us on 13 72 86.
Our commitment to you
During tax time, we will hold regular meetings with members of the ATO Tax Practitioner Forum (ATPF) to share our progress, to discuss any emerging issues and to take on board your ideas.
Information from these meetings will be:
We will aim to finalise the majority of electronically-lodged current year individual returns within 12 business days of receipt; with the remainder expected to be finalised within 30 calendar days.
For the 2012-13 income year, we have changed our approach for the small percentage of electronically-lodged returns that are affected by delays. From the end of July 2012, we will send you a weekly email with a list of your clients whose returns we do not expect to finalise within 30 calendar days. The list will include the:
- client's name
- tax agent client identifier
- year of return
- reason code for the delay.
In order to protect your client's personal tax information, a separate email will be sent to you at the beginning of July 2012 with a full list of reason codes and a description of what each code means. You will be able to cross reference the reason codes in the weekly emails, with this list.
Individual returns lodged on paper could take up to 42 calendar days from receipt to be finalised. We do encourage you to lodge electronically if at all possible.
When you electronically lodge a return for a non-individual, we will aim to finalise the return within 14 calendar days of receipt; while returns lodged on paper could take up to 56 calendar days from receipt.
If a return for an individual or non-individual is incomplete, incorrect, needs checking or relates to a prior year, it may take us longer to finalise.
We are in the final stages of ensuring our staff and systems are ready to support you and your clients during Tax Time 2012.
We recognise that you will also be very busy preparing your practice for tax time and have provided some information below to help you.
On 5 July 2012, we will start full processing of 2011-12 tax returns.
From 13 July 2012 we expect to start paying refunds.
The timeline below outlines the key dates in our preparation for Tax Time 2012.
If you have recently changed any of your tax agent practice's following details, phone us on 1800 443 846 to let us know your updated:
- postal address
- phone number
- fax number
- email address.
These details are critical in ensuring our correspondence, phone contacts and faxes are directed appropriately and that we can keep you up-to-date with important messages via email.
The 'Your details' screen in the Tax Agent Portal will verify if we have your latest contact details.
It is important that you undertake regular reviews of your client list to add any new clients you have for this year and to delete those clients you no longer represent.
You can update your client list using the electronic lodgment service (ELS) client update (CU) transaction, or the 'Add client' function in the portal.
Your authority to act on behalf of a new client for lodgment purposes only takes effect from when we receive it. To ensure any new clients are covered by your lodgment program for 2012-13, you must successfully lodge the income tax authority with us by 31 October 2012.
If you accept a new client for income tax purposes after 31 October 2012, you should check the lodgment due date for the client on your client list from the ELS or the portal. If the new client was previously a self-preparer, they will not be covered by your lodgment program and they may have needed to lodge by an earlier due date, and their returns should be lodged as soon as possible.
If your clients have one or more prior year tax returns outstanding as at 30 June 2012, then their 2012 due date is 31 October 2012. If all overdue prior year returns are lodged by 31 October 2012, the 2011-12 return will be due as per your lodgment program. The update for the 2012 year can take up to three weeks after 1 July 2012 to appear on your client list.
If you have clients who have been prosecuted for non-lodgment of prior year returns, then the 2012 due date also may have changed.
Availability of lodgment due dates on our systems
The lodgment due date for all of your clients will be available on the portal by the end of July 2012.
It should be noted that lodgment and payment due dates may change where the client circumstances change - for example, the tax level may be affected where a prior year amendment is processed.
If your client list does not display a due date for lodgment, or you are unsure of your client's lodgment due date, phone us on 13 72 86 Fast Key Code 1 3 2 for clarification.
Deferrals will continue to be available under the lodgment program and are designed to help you manage short-term difficulties that may impact on your ability to lodge by the due date.
We will continue to monitor the usage of deferrals to ensure that a level playing field is maintained and we will contact your practice where we believe it has become part of your normal business model.
Make sure you regularly review your practice's internal procedures and security controls so that you can prevent your firm being involved in fraudulent activity.
In the last year, we have seen a number of attempted frauds involving the deliberate or unknowing actions of registered agents and their staff. These incidents have occurred where internal controls have not been strictly maintained.
Some examples include:
- client information compromised and fraudulent lodgments made because staff have shared user login details and passwords
- fraudulent returns lodged subject to identity crime because new client identities were not verified and documents were not properly checked
- registered agents accepted multiple fraudulent returns for lodgment from strangers whose authority was not verified.
As you prepare to lodge your clients' returns, the following information will help you understand how your clients' returns will be processed through our systems and what you can do to minimise unnecessary delays.
It includes informative updates about some of our activities and processes, along with advice about situations that can delay return processing, like common errors and incorrect client details.
Situations that can delay return processing
Longer than standard processing times will occur where:
- returns for previous years have been lodged with the current year's return
- we need to cross-check data with other government agencies (including Centrelink and Child Support)
- a client has a debt or insolvency obligation with us
- we have queries about information provided in a return.
When these situations arise, we usually need to review the details, contact you and where necessary, adjust the return.
Common errors to avoid
Avoiding the following common errors, when preparing your client's return, will minimise the possibility of a delay in issuing your client's notice of assessment.
In 2011-12, there were over 100,000 errors in returns prepared by registered tax agents due to incorrect details, such as:
- date of birth.
Validate the front-page details of all returns before lodging.
Some of the other common errors we see during tax time include:
- insufficient information provided - for example, just the year of birth included rather than the full and correct date of birth, or not completing the income test questions for relevant clients
- lodging duplicate returns for the same year - if your client has already lodged their return and needs to correct a mistake, you must request an amendment
- repeating information - if you have already declared information at a previous question, do not repeat it in the Additional information schedule
- unnecessary or irrelevant information included due to transposing details from a previous year's return into the current year return - if rolling over details from a previous year's return in your software, make sure you delete information that is no longer relevant, including the Additional information schedule.
Providing client details that do not match our records
If you lodge a return with client details, which do not match what we have on our systems, it will result in the return mismatching and being delayed.
We recommend that, prior to lodging your clients' returns, you:
- confirm details with your clients - particularly their names and addresses
- compare their details with those on the portal
- update any incorrect details using the portal or ELS before you lodge their returns.
If you transpose details from previous year returns, ensure that the details in your ELS software are also corrected before lodging.
The Tax Agent Portal pre-filling service helps ensure the accuracy of returns by allowing you to cross-check information, provided directly by your clients, with that held by us.
Pre-filling reports display the following client details from our records:
- Australian residency (as at the report creation date)
- postal and residential address
- phone number
- date of birth.
Remember, pre-filling reports only reflect the information received by us as at the date of the report.
The full set of pre-filling information may not be available until later into the tax time period. We will keep you informed progressively of the pre-filling information that is available through eLink, and by updating web content that shows the percentage of data available in comparison to the total amount of data received for the previous lodgment period. To access this information, refer to Pre-filling 2012 - Information availability.
We continue to use analytical models to help identify and review returns that may contain incorrect or inflated claims. Some of the common issues identified include:
- understated income, or claims for false PAYG withholding credits
- overstated or fraudulent deductions
- non-entitlement to claimed offsets or credits - for example, spouse offset and franking credits
- non-entitlement to a claimed Medicare levy exemption
- non-residents claiming to be residents for tax purposes
- instances of identity takeover through theft of tax file numbers and personal details.
We have invested in refining the analytical models to reduce the number of refunds stopped that after review are shown to be correct and those that may contain small and inadvertent mistakes. This together with more staff available to commence reviews will result in significantly shorter delays if a refund is held.
Where we hold a return, we will write to you and your clients advising them of the expected delay. We will also provide a list of the items they provided in their return that may require further verification.
Delays may also be experienced where third party information, we use to verify some refunds, is not available at the time the return is lodged. For example:
- most employers are not required to lodge payment summary annual statements until 14 August and some returns lodged before that date may be delayed until this information is received
- returns with distributions from partnerships and trusts when the related entity has not yet submitted its return.
It is very important that your clients provide all tax-related documents to enable you to prepare accurate income tax returns.
Last year we cross-referenced information reported in tax returns against over 530 million transactions provided to us by third parties to identify omitted income and incorrectly claimed offsets, such as the dependant spouse tax offset.
Traditionally this approach has focussed on areas such as omitted interest and employment income; however, we are now broadening our information matching to encompass a greater range of areas such as:
- capital gains tax from the disposal of shares and property
- foreign source income
- contractor income from payments made by government agencies.
Using this approach, last year we contacted over 600,000 taxpayers who had apparent discrepancies in the information they reported in their tax returns. Nine out of ten returns were amended as a result of our enquiries.
The fastest, most secure way for your clients to receive their refund this year is to have it sent directly to a nominated Australian bank account using electronic funds transfer (EFT). Joint accounts are acceptable.
To ensure your clients can take advantage of this fast and efficient service, when they book an appointment with you, remind them to bring their bank account or financial institution details with them.
Before you lodge, double-check you have completed your client's bank account details on their return.
We will keep you informed about our progress during tax time through our online updates and regular communications. We encourage you to provide relevant information to your clients to manage their expectations about when they will receive their notice of assessment, based on their individual circumstances.
The lodgment of the return will not be visible on the portal until the return is processed and the assessment amount is posted to your client's account.
Even when the issue date and assessment amount become visible on the portal, they are both subject to review and change until the notice of assessment actually issues.
We will regularly publish tax time processing reports for 2012 to our website. You can subscribe via our website to receive these updates.
For explanatory material explaining the notice of assessment (NOA) and statement of account (SOA), refer to:
This year we have invested more resources into providing proactive contact with you and your clients should there be a reason why a return will not be able to be finalised within the standard timeframe, or if it is identified for a compliance refund review.
If you do not receive the contact and information you need through these processes, or if you if you have any concerns or questions, phone us on 13 72 86.
Last Modified: Monday, 25 June 2012