Senator KEMP (Assistant Treasurer) (3:06 PM) —Last Thursday Senator Hutchins asked me a question in relation to PAYG. I have received some advice from the Australian Taxation Office, and I seek leave to incorporate that statement.

Leave granted.

The document read as follows—

On Thursday 21 June 2001, (ProofHansard page: 24741) Senator Hutchins asked me:

i. Is the minister aware of serious problems with the Australian Taxation Office's (ATO) administration of the new so-called simplified tax instalment activity statement?

ii. Can the minister confirm that approximately 80,000 self-funded retirees, mum and dad investors, and pensioners have received multiple letters from the A TO containing patently conflicting demands for payment?

iii. Is it true that by paying one notice over the other, even though both relate to the same period, a taxpayer risks being slugged with a significant penalty interest charge of 13.86 per cent?

iv. Is this just another aspect of this so-called new simplified tax system?

I now seek leave to have this incorporated in Hansard.

i. I am not aware of any serious problems with the ATO's administration of the simplified instalment activity statement. However, I am aware of some issues arising from the overlap of pay as you go (PAYG) annual instalments and the lodgement of income tax returns.

ii. The taxpayers who are affected are those who did not lodge their 1999-2000 returns until after they were notified of their annual PAYG instalment in April 2001. When their 1999-2000 returns were lodged, the Australian Taxation Office (ATO) advised them of a new liability based on the more current information in the 1999-2000 return.

iii. The Commissioner of Taxation has stated that the general interest charge will not be imposed if the taxpayer pays the wrong amount by paying one notice instead of another.

The vast majority of taxpayers in this situation use tax agents. The ATO has contacted tax agents over the past few weeks to ensure that they are aware of the situation and what is required.

iv. The Commissioner has indicated that this is a transitional problem. When the annual PAYG instalment payment date is moved to October, this will not be an issue as all income tax returns should have been lodged well before that time.