Plans to scrap returns needs to be right
Moves by the Australian Taxation Office (ATO) to eliminate the need for millions of income tax returns, as early as 2014, needs to be carefully planned and executed, according to the Institute of Public Accountants (IPA).
The ATO use of technology to pre-fill income tax returns and then send to taxpayers to gain their acknowledgement as completed with a simple 'yes' or 'no' response could potentially reduce the need for lodgement for up to 1.4 million taxpayers. Over time this number could grow substantially.
"The innovation and smart use of technology by the ATO is to be commended," said IPA chief executive officer, Andrew Conway.
"However, the ATO must get its use of technology right before it embarks on this initiative.
"The ATO has had some difficulties in recent times with its various IT platforms including the program to process tax returns and more recently with its website and portal which has caused significant cost for accountants and taxpayers both in efficiency and time.
"The plan may assist those people with very simple tax returns but the vast majority will still require the services of tax agents who are there to provide added value to their clients.
"People should be fully satisfied before agreeing to the return automated by the tax office and if unsure whether or not other tax deductions could be claimed, should seek advice from their trusted advisor, the accountant.
"It will be important for the ATO to highlight to the public, both the risks and obligations associated with streamlined tax returns. It's not a one way street as taxpayers will still have to calculate their tax position in order to decide whether to accept the ATO's assessment. Otherwise, they could be agreeing to accept a lower refund without even realising.
"At the end of the day, it is good that consumers have a choice but considering that tax laws have not been simplified to any degree, a truly informed choice may require input from their trusted advisor," said Mr Conway.