Since the government’s announcement on its Nation Building and Jobs Plan on 3 February, all professional bodies have received considerable member feedback expressing concern about the delivery of the announced tax bonus. In particular, members are concerned at the amount of work it will create (especially for small practices) as well as additional costs (bank transaction fees, postage etc).
One particular issue which has been raised is the impact on tax agents’ ‘trust accounts’ and the cost to the agents of delivering the bonus on behalf of the government. As many taxpayers have their refunds banked through their accountants and tax agents, it is likely there will be considerable pressure on these agents to receive, process, withdraw and post or send the bonus to their clients (or former clients). Some members have stated that they may even have to consider closing their trust accounts.
We appreciate that the Tax Office has been undertaking consultation on the issue of delivering the tax bonus including holding a workshop to discuss and resolve these concerns. We note the Tax Office’s broadcast on 18 February 2009 and would appreciate further advice and information on the implementation of this approach.
We also note the Prime Minister’s advice in a recent briefing to industry that the government was relying on massive goodwill to deliver its fiscal stimulus package. Is there anything else we should be telling members and other stakeholders?
Response
An update on the support and assistance provided to tax practitioners to assist in the redirection of the tax bonus payment to their clients is provided.
The tax profession has raised concerns about the ability of agents to cope with workload pressures and additional costs involved in redirecting tax bonus payments.
The Tax Office is in regular consultation with the tax profession to ensure payments made through tax agents are expedited with minimal impact on agent workloads.
Following comprehensive consultation in various tax practitioner representative forums in early February, special arrangements were introduced to enable agents to focus on processing 2007–08 income tax returns for eligible clients.
The lodgment of company, trusts, partnerships and superannuation fund returns has been deferred from 15 May to 5 June 2009 and additional time has been provided to lodge 2007–08 returns for those affected by illness or natural disasters. These extensions have been put in place to allow agents to focus on processing 2007–08 returns for eligible clients.
Ongoing consultation with the tax profession has enabled the development of other initiatives to assist practitioners in making payments available to clients quickly.
A tax agent broadcast published on 26 February 2009 provided tax agents with a choice of three options that allows them to minimise their costs by opting out of correspondence and payment redirection work for some or all of their clients.
From the week beginning Monday 23 February 2009, the Tax Office is making available to tax agents a list of their clients who have been identified as being eligible for the tax bonus. Agents can choose to have the Tax Office:
- send all tax bonus payments directly to their clients’ last notified residential address or nominated personal bank account
- send some of the listed clients’ tax bonus payments directly to their clients’ last notified residential address or nominated personal bank account, or
- continue to receive the payments on behalf of their clients.
This initiative was supported by a Tax Office Tax Practitioner’s Forum on Friday, 27 February 2009 and it was confirmed that no additional assistance is necessary at this time. Forum membership includes representatives from all tax practitioner associations.
To date, we have received 6,000 requests for client lists. From the requests, 2,700 agents have selected Option 1 and 130 agents have selected Option 2.
Entitlements will be posted to client accounts by 20 March 2009 and tax agents will be able to view these details on the portal as of that date.
Payments will commence progressively from 6 April:
- EFT payments are scheduled to be completed by 5 May 2009.
- Cheque payments are scheduled to be completed by 13 May 2009.
Payments will be issued evenly across all states and a random program adopted to identify sequence of payment. Follow up processing and payment schedules are planned in May and June 2009.
A constitutional challenge was received by an Australian resident via a writ filed in the High Court Australia on 26 February 2009. The challenge claims that the Tax Bonus for Working Australians Act (No 2) 2009 (the Act) is invalid on two grounds:
- That the bonus is characterised as a gift and the Act is not a law with respect to taxation under section 51(ii) of the Constitution or any other paragraph of section 51.
- That the payment is not authorised as the Act fails to comply with subsection 81 and section 83 of the Constitution as it does not contain a provision which lawfully appropriates money for the purposes of the Commonwealth.
The matter is being lead by Treasury with support from other agencies including the Tax Office and an expedited hearing was granted. The matter is set down for hearing before the Full Court on 30–31 March.
Updates will be provided regularly through our normal channels of communication including the Tax Practitioner Forums and newsletters.
Meeting discussion
Members thanked the Commissioner for the information available on this issue, and advised that there was now a degree of comfort associated with it. The two main dates associated with it are the High Court challenge and the payment dates. Members appreciated the consultation that occurred and requested that prior consultation on issues affecting tax practitioners occur again in the future. Members found the three options useful and appreciated the extension periods provided. The usefulness of the 'opt out' option was emphasised. The next anticipated issue concerns the expectations of clients regarding payments. Members were advised that the quality of residential address information is an issue from the Tax Office perspective, and may be a particular issue to monitor with agents who 'opt out'.
A large number of calls have been made to the Tax Office and approximately 112,000 individuals have changed their address details for the payment. Approximately 7.1 million (as identified in February) are eligible for the payment as identified in February from tax return lodgments, out of 8.7 million in total. There are 300,000 additional lodgments over the same time last year.
Payments will commence progressively from 6 April for those who have lodged their returns. Payments will extend over a four week period, and messages will be distributed to agents to inform them of the mail out process. Additional phone lines will be available from mid May to accommodate additional calls.
This topic will be discussed at the ATO Tax Practitioner Forum (ATPF) meeting of 15 May 2009.
The Commissioner advised that the office will use lessons from this exercise to inform any similar future initiatives.
Information regarding the Tax bonus, including frequently asked questions, is available on the web site.
Post meeting update
Payments have been made progressively to eligible taxpayers. Several issues associated with the payments are being addressed and resolved with assistance from the tax profession.
Media release 2009/31 of 7 May 2009 announced the Tax Office has distributed 6.5 million tax bonus payments and is on track to distribute 7.8 million payments by 16 May 2009.
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Last Modified: Friday, 3 July 2009
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