2. Update on key issues and resolutions
2.1 On-time Lodgment Program performance letters
At the 8 October meeting, the on-time performance letters were tabled for co design.
The updated letter incorporating forum members’ feedback is currently being reviewed by the ATO business design writers. The design changes focus on encouraging continued improvement, when treatments for underperformance will apply and providing a comparison to the practice’s own performance.
It was noted that the next version of the letter will be tabled at the next face to face meeting for members’ review and endorsement.
2.2 Fringe benefits tax lodgment date proposal
The Chair provided a summary of the proposal submitted by the Tax Institute to further extend the lodgment due date for annual Fringe benefits tax returns from 25 June to 7 July.
The proposal was briefly discussed at the 8 October 2014 meeting, with a view to providing the ATO assessment of the proposal at the next A TO Lodgment Working Group meeting.
The Chair noted the following in respect the ATO’s assessment:
- Lodgment patterns over 2011-2014 returns shows that the majority of returns are lodged by the 25 June date. For the 2014 returns 68% (approximately 43,000) were lodged by the 25 June, 6% (4,000) lodged by 7 July, 11% (7,000) post 7 July and 15% remain unlodged.
- Revenue Analysis Branch assessment identified that a majority of taxpayers who utilise the lodgment due date (25 June) also defer payment (due 28 May) to that date and hence there would be a revenue impact from the proposal. Additionally the current and any future delays in lodgment of the returns will impact on the revenue estimates for financial statements.
The FBT representative (guest to the meeting) queried whether the ATO had undertaken analysis on the number of amended returns made by tax agents, indicating that many agents would be lodging incomplete/inaccurate returns to meet the 25 June lodgment deadline.
Fringe benefits tax annual return lodgment due date proposal
The ATO to undertake analysis of the number of amendments lodged by tax agents. This topic will be carried over to the next face to face meeting.
2.3 Managing clients with multiple prior years’ outstanding
At the 8 October 2014 meeting, the Lodgment Working Group co designed a new initiative to cater for the impact to tax practitioners of servicing new or re-engaged clients with prior year returns overdue, and the perceived impact to the practice’s on-time lodgment performance.
The new initiative enables tax practitioners to request a lodgment deferral for the current year income tax return (due on 31 October), while they seek to bring the prior year returns up to date. It is intended only for agents who have the capacity to service the new or returning clients. This initiative was launched and communicated to the tax practitioner community on 29th October 2014.
The new lodgment deferrals request form also enables tax agents to indicate they are seeking a lodgment deferral for the current year income tax returns, as they have taken on a new or re engaged client who has prior years’ income tax returns outstanding.
Early intelligence shows that approximately 40 tax agents have taken up this initiative.
An attendee questioned whether the initiative also extended to providing tax practitioners with access to remittance of failure to lodge on time penalties, as they were seeking to bring re engaged clients back into the tax system. It was clarified that the new initiative provides a deferral of time to lodge for the current year return, prior year returns which are outstanding are subject to penalties and interest. The normal channels for seeking a remission of penalties and interest should be used by tax practitioners.
2.4 Lodgment deferrals smart form
The new lodgment deferrals form was demonstrated at the 8 October meeting and further feedback was sought from members following the meeting. Practitioner members of the forum also participated in final user testing of the form and suggested changes and comments were incorporated into the final design.
The intent of the new form is to simplify and streamline the process for agents to make deferral requests and to reduce the number of administrative errors associated with these requests. The majority of tax practitioner deferrals requests that are rejected by the ATO are due to administrative errors. Examples include agents using the incorrect form or not providing sufficient information to process the request.
There have been a number of communication activities to launch the form:
- Forms and updated web content published and available on ATO.gov.au - Friday 28 November 2014
- Article announcing new forms published in Tax Professionals newsroom – Friday 28 November 2014
- Headline included in Tax Professionals and BAS Agent newsletters – Wednesday 3 December 2014
Early intelligence shows that the new from is working as intended, although there are a small number of user errors causing delays in processing requests. Some attendees noted that the form is ‘slow’ to open and this may be due to the use of tablets, the project team will investigate the issue further.