ICAA gives conditional support to 'push' tax returns
The Institute of Chartered Accountants (ICAA) has given its qualified support to moves by the Australian Taxation Office to implement so-called "push" or "pre-filled" tax returns for people with relatively simple tax affairs.
Responding to an announcement by ATO second commissioner Neil Olsesen, the ICAA's head of tax policy, Michael Croker, said, however, that the implementation of such a system would demand a highly specific approach on the part of the ATO.
He said the institute's tax policy team had researched pre-filled tax return arrangements in Scandinavian countries including Denmark and Norway, which had been credited as models for the ATO.
"We found that there will be many factors critical to the success of the ATO's strategy, and the pre-filled tax return arrangements will need to be underpinned by:
- accurate withholding of tax at the source (eg, PAYG tax currently withheld from salary and wages is sometimes computed in a manner which over-collects tax)
- high integrity taxpayer identifiers to safeguard privacy and protect taxpayers from fraud
- comprehensive and automated systems for third party reporting of data to the ATO
- large scale, timely information processing, and
- automated and minimal interaction with taxpayers.
Croker said the ATO will also need to commit to identifying and quickly refunding any tax over-payments, treating tax returns as 'final' unless fraud or evasion is uncovered and addressing current gaps in tax data collection.
"There will be sceptics who will point to this development as a veiled means of reining in escalating claims for work-related and other tax deductions," he said.
"Others will be uncomfortable with the ATO's dual role of tax collector and tax return preparer."
However, he said the ATO would be acutely aware that its initiative would be judged a failure if taxpayers found that their tax had been calculated incorrectly or felt it prudent to seek tax agent assistance to double-check its calculations.
Originally published by SMSF Essentials.
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