Where’s The Tax Office Up To?

It appears the ATO are currently quite busy processing income tax returns at this stage of the calendar year.

The ATO has recently sent out a broadcast to all tax agents noting delays in processing the tax returns at this time, which is also leading to a delay in following up queries raised as to the progress of processing those returns.

Generally, for income tax returns that are lodged electronically, the ATO will process those returns and issue assessment notices and refund cheques within 14 days of the lodgement of those returns.  Some refund based returns have been delayed in the past where the refunds have been quite sizeable, and the ATO took further time to review the tax return to understand why the refund was occurring.  In most cases, the ATO merely needed some form of documentation sent to them to confirm the basis of the refund was correct.

Given the current backlog of income tax return processing, we would expect refund based tax returns may take a few weeks longer to process and have the refunds issue, hopefully before the Christmas period.

In other ATO news, the Tax Office continues to expand its data matching project on items disclosed in the tax returns.

As many of you would be aware, various financial institutions and corporations provide financial information to the ATO in respect of your financial affairs.  These institutions are required to provide this information by law, and will transmit this data to the ATO identifying it to the person/entity’s tax file number.  Such information could include:

• Salary details as provided by employers
• Interest paid on bank accounts
• Dividends paid on shares held
• Distributions from managed funds/trust investments
• Sale of share investments – as advised by the share registries
• Social security benefits/pensions paid by government departments
• Private health insurance coverage details from the health funds

So it is now a much easier exercise for the ATO to match up the financial information provided to it by these institutions compared to what is disclosed in your tax returns.  Where the ATO finds a discrepancy, it will write to the taxpayer noting the discrepancy and requiring suitable explanation for it, or an amended assessment will issue to correct the error.

It can be very easy to overlook a bank account and the interest earned off it whilst gathering all your tax return information together.  But not all is lost.  The ATO has added a tool on the ATO tax agent website to allow tax agents to print a report listing the information transmitted to the ATO on each client’s taxation affairs.  So, a useful tool for us tax agents to verify the information needed for each client’s tax return.

Tags: Tax Office matching, update

This entry was posted on Saturday, November 22nd, 2008 at 12:45 pm and is filed under Tax return preparation. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.