The review of self assessment (ROSA) nil liability and loss returns recommendations aim to give specified taxpayers, who act in good faith and do not evade their responsibilities, increased certainty by providing finite periods of review.
Prior to the ROSA changes, the period of review for an assessment started to run from when tax became due and payable. In the case of a nil liability or loss return, there was no start to the period of review, as there was no tax due. As a result, the Tax Office had an unlimited period to review the affairs of taxpayers with nil liability and loss returns. Changes to the law in 2005 ensured that in most of these situations the amendment period commences at the time the Commissioner gives the taxpayer the notice of assessment (including nil or loss assessments).
On 22 August 2007 the Government announced the Review of Unlimited Amendment Periods in the Income Tax Laws and released a Treasury discussion paper. The paper examines those provisions in the tax law that allow an indefinite time for the Commissioner of Taxation to amend taxpayers' assessments to ensure the correct amount of tax has been paid.
Principle 6 of the discussion paper proposes a finite period of review should apply even though taxpayers who have lodged a return do not receive a notice of assessment.
In the case of trustees, the Treasury discussion paper proposes that the Commissioner only be allowed to raise an original assessment within four years from the later of the due date for lodgement of the return or the actual lodgement of the return. This would effectively provide an amendment period for trustees who had not received an assessment.
As an interim matter the Tax Office will alter its administrative practices so that any original assessment for a trustee is only issued, within four years from the later of the due date for lodgement of the return or the actual lodgement date of the return, except where there has been fraud or evasion.
Income years affected: Income year ended 30 June 2005 (or approved substituted period) and later income years.
This new administrative approach will give trustees increased certainty by providing a finite period of review.
Last Modified: Thursday, 22 May 2008