On Tuesday 7 May, Jenny Wong, KPMG, CTA and Peter Murray, KPMG, CTA attended a meeting of the NTLG Consolidation Sub-Committee on behalf of The Tax Institute. The discussion focussed on the ATO’s proposed final view on issues relating to the ‘rights to future income’ application rules in Part 4 of Tax Laws Amendment (2012 Measures No.2) Act 2012, which are relevant for determining whether a taxpayer’s past assessment is protected, despite retrospective legislation amendments. The ATO advised it is looking to issue taxation determinations within the next three months. The rights to future income prospective rule issues and current ATO compliance activity were also discussed. ATO compliance activities on RTFI claims The ATO advised that preliminary risk review letters have gone out to a limited number of taxpayers. A further batch of letters is intended to be sent in the coming weeks with a more targeted focus on the type of assets involved. The ATO will commence compliance activities on the large business sector shortly. The ATO has published a document in April 2013 setting out details of the ATO’s assurance activities, which is aligned to the information request in the SME ATO letter. The ATO is considering a tailored approach in the Large Market which may reflect the taxpayer’s risk rating and other variables such as the kind of industry taxpayer is in, its assets and liabilities. Members who seek further information are welcome to contact us at Tax Policy.  ...

The implications (both real and political) of the Federal Government’s 2013-14 Budget have been analysed and commented upon ad nauseum this week. But what does it mean for tax reform? Unfortunately, the Budget is yet another wasted opportunity to embark on a long-term tax reform plan that is vital to ensure that the country is well positioned for the challenges of the decades ahead. Instead, the Government has chosen the easy path of tax grabs from business to fund its excessive spending commitments. Efforts to protect the integrity of our tax system by closing loopholes are worthwhile, but the Budget measures ignore the long-term vision laid out in the Henry Tax Review. In addition, the Budget adds significantly to the stock of announced but un-enacted tax measures. An outstanding agenda of more than 100 tax measures in an election year will heighten uncertainty for business in an already volatile environment. Through the Tax Institute’s technical sub-committees we will be working through the details of the discussion papers and participating in the consultative fora over the coming weeks and will keep members informed as the changes take shape. Late yesterday the Opposition leader delivered his Budget reply speech. The promised tax white paper that builds on the work of the Henry Review is a positive step towards a vital national conversation on tax reform. In other news this week, the Tax Institute and the Business Law Section of the Law Council of Australia wrote to the Treasurer and Shadow Treasurer to express our deep concern regarding the recently announced measure to reform the self-education expense deduction by capping the deductible amount at $2,000 per annum from 1 July 2014. The imposition of a cap on the deduction is a very blunt instrument to achieve the object of preventing extravagant claims. The proposed measure would capture and limit all claims for self-education expenses, regardless of their nature. An educated workforce should be one of the key objectives of Government. Providing a financial penalty to those seeking to self-fund their education is a significant disincentive. The objective of building a smarter Australia will be compromised through the introduction of the proposed cap. The imposition of a cap might well prevent large deductions from being claimed, but in doing so, it would also penalise Australians who are endeavouring to improve their qualifications for work or business who are not incurring unnecessarily excessive costs. Accordingly, many legitimate claimants would suffer higher out-of pocket expenses as a result of this measure. You can read the entire letters here.  Please feel free to be in touch should you wish to discuss any of the above:  This e-mail address is being protected from spambots. You need JavaScript enabled to view it   Kind regardsRobert Jeremenko CTA ...

MEMBER 95 writes, in response to Member 91's comments in last week's TAXVINE - see 2013 TAXVINE No 16 (10 May 2013):"I refer to feedback from Member 91 last week concerning correspondence received from the ATO stating that to continue to receive concessional lodgement dates under a lodgment program I must now lodge all returns electronically. I was once the principal of a tax practice where I lodged over 800 returns annually; however, since selling my practice, I now offer only to family (free of charge) to have their returns lodged by a tax professional (I have retained my membership of The Tax Institute and fulfil my PD requirements). To continue this service to family I must now fork out for software for a service for which I receive no financial benefit. As requested by Member 91, can somebody tell me where the law requires returns to be lodged electronically?"MEMBER 96 writes:"I agree with member 91 regards 'forced' ELS and take a further view that it would be most appropriate for the ATO to reimburse the software costs as we are doing the bulk of the work for them. I worked in the ATO back in the 'old days' when paper returns were input by one bank of operators and then edit checked by other operators. The cost saved to the ATO is significant so now that we do not have an option then why not reimburse us our costs - it all seems like a 'one way' street as far as the ATO is concerned by moving all costs back to us and then back to the client. Clients will resist the fees and then cease to lodge and the compliance burden on the ATO will increase due to non-lodgments. It all seems self-defeating in not providing all pathways."MEMBER 97 writes:"I am in a similar position to Member 91, running a tax consulting practice and lodging only a few returns. This year I will lodge 2 large corporate FBT returns and struggle to get them done by the 21 May deadline. I am granted no automatic extension of lodgment date because (a) I lodge less than 25 FBT returns and (b) I do not lodge electronically. As a sole practitioner I would be lucky to get through 25 FBT returns in a year, let alone a couple of months! Why does the ATO discriminate against us 'one man bands' in this way? Yes I can apply for an extension but then I'd have to concoct a reason for needing more time. Being only human and able to fit only so much into each day is not on the ATO's list of acceptable reasons for an extension of time to lodge. Surely the large firms with teams capable of lodging more than 25 FBT returns are less likely to need the extension! ;Similarly, why should I have to pay for software to lodge electronically? To do so means my small profit dwindles even further, spread across my 2 returns. I'd be very happy to lodge electronically if a free (or very cost effective) electronic lodgement option were available. How about a concession for small tax agents for once - let us lodge a PDF copy of our scanned returns via the TAP. Thanks TAXVINE for the weekly chuckle!" ...

MEMBER 92 writes:"It's Monday afternoon 4pm 13 May 2013 - desperately trying to do things by Wednesday 15 May and the Portal is grinding to (practically) a halt - it is very frustrating!!How about the ATO add one day to the 15 May Lodgment deadline for every day the Portal is not working - surely that's not too much to ask?Can you arrange that by this Wednesday for us PLEASE?"MEMBER 93 writes:"Yes, it is 15 May 2013, morning after the budget, here I am at 6:30am trying to prepare and lodge returns and getting information from the Portal and... of course it is a lottery as to whether the Portal is up. At this time it isn't, we are being forced to go more and more electronic yet the Tax Portal is getting more unreliable. Don't get me wrong, the Portal is of great assistance to tax agents but its unreliability creates continuous slow-downs and stuff ups in that files have to be stopped, delayed etc until we can get the relevant information - as well as getting angry at the system. Come on ATO get your act together - surely today is a day when the Portal must work perfectly. It should work perfectly every day.Cheers and thanks for budget update."MEMBER 94 writes:"It is 6.55am on Wednesday morning 15 May 2013 and I am trying to work and get access to the tax agent Portal to obtain details from the current years reports.Once again the Portal is not working and there is no advice about this in the ATO system maintenance area.It is really time that the ATO started to provide a decent service and keep us all advised of what is going on. How are we expected to comply with lodgment rules when the Portal does not work?Quite obviously Mr Swan's budget cuts have now hit the ATO as well."THE TAX INSTITUTE'S TAX COUNSEL, STEPHANIE CAREDES, COMMENTS: "The ATO contacted The Tax Institute on Wednesday afternoon to advise that the Portal issues that arose that morning were due to a hardware issue at a data centre. The primary hardware failed and the backup system was immediately put into place. However, due to the amount of traffic on the Portal site as a result of the 15 May 2013 deadline, issues arose with the backup system due to the extra workload. The Tax Institute was informed that the Portal was back up and running that afternoon. Members did inform us of the issues they were having with the Portal that day and members are always encouraged to contact us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it if they are having continuing issues with the Portal." ...

MEMBER 99 writes"How hard is it to add up two numbers and subtract the result from another?We have received an income discrepancy letter from the ATO for a client who received a capital gains distribution from the Family Trust. The client had a carry forward capital loss from prior years and a net capital loss from direct share transactions during the year. The ATO wanted to know why the net taxable capital gain for the year was less than the distributed amount as reported in the Family Trust return. The prior year loss was recorded in the ITR from the prior year (also shown in the lodged ITR for the year in question) and the current year capital loss was also reported in the CGT schedule.What a waste of time and resource to respond within the standard time frame to account for the ATO's own shortcomings. Just another example of the frustration we have to deal with. All the while trying to meet the lodgment deadlines at this, the busiest time of our year.Good luck!" ...