Over a million Australians might avoid having to fill in a tax return next year, the ATO has revealed.
In a speech delivered at the CPA Congress in Canberra yesterday, ATO second commissioner Neil Olesen revealed that as many as 1.4 million Australians could be offered new “push” tax returns from as early as next year.
The ATO already collects much of the information Australians need to lodge a tax return, and is intending to use this information to ‘pre-fill’ tax returns with information such as income earned, Medicare claims, bank interest, and other shares and dividends.
These pre-filled returns would then be sent to taxpayers, who could tick a ‘yes’ or ‘no’ to indicate whether the information is correct.
Much of this pre-filled information is already used if a taxpayer tries to lodge a tax return through the ATO’s online e-tax system, but lodging a tax return is still necessary regardless.
“The key principle here is to use the information we already routinely receive about taxpayer affairs.?.?. to send the tax return to the taxpayer, rather than the current way where all we offer is a pre-fill service, while still requiring the taxpayer to prepare and lodge a return each year,” Olesen told the conference, adding that the ATO’s prototype was “looking pretty good”.
Paul Glover, a tax partner at Pitcher Partners, told SmartCompany the announcement was “a bit of a surprise for most people”.
“Some outside the ATO would have known they were looking at this, but obviously they’ve been beavering away behind the scenes to see how they can get this done.”
While he said this was a positive step, Glover doubted it would have a wide impact on how Australians lodged their tax returns, as most taxpayers make use of deductions.
“It’ll give you a draft tax return. The question is will people just accept that and lodge it. I think the reality is very few people will do that. They will still go to their tax agent, under the current regime, and see what deductions they can claim in addition to get the best position to get the lowest tax for them.”
Australia has one of the highest rates of taxpayers who use tax agents to lodge their tax return, which Glover says is inefficient but a result of the complexity of the tax system.
“What’s missing here is a standard tax deduction. One was announced in 2011 and then withdrawn. Without that, I don’t think many people will just take their prefilled tax return, sign it and lodge it.”
In his speech, Olesen said the ATO was looking at other improvements to the tax system.
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“Why, for example, should every company have to provide the same amount of information on a tax return when their level of risk and materiality is different?
“If you are 30 years of age, why does our current electronic tax form ask you to complete the label relating to the Seniors Tax Offset?”
Olesen also used the speech to spruik the ATO’s progress in its dealings with small business, highlighting a number of recent changes in this area.
For example, the ATO has implemented an after-hours call back service, “allowing small businesses to be in touch with us when it suits them”, and launched a Small Business Assist, an online tool that “can help small businesses meet their obligations”.