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Self-assessment reforms could go further.

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Joel Fitzgibbon MP

Acting Shadow Treasurer Shadow Minister for Revenue Shadow Minister for Banking and Financial Services

17 December 2004


The changes finally announced by the Treasurer to the self-assessment system are a step forward for taxpayers. They provide greater certainty and involve a fairer system for private rulings, audits and reduced penalties. Labor welcomes any efforts to reduce the compliance costs of the tax system.

But these reforms were expected much earlier in the year. The Government needs to provide a reason for the delays. If these changes were introduced earlier they would have provided relief to the victims of unscrupulous operators of Employee Benefit Schemes, who still face some penalty interest on tax debts against the recommendation of the Inspector General of Taxation.

And there is a legion of devils in the detail. The major unanswered question is how the Tax Office is going to implement these changes and what safeguards will be in place to ensure they work as intended. An example is the failure of the Government to explain how the Tax Office will keep records of oral advice (recommendation 24).

A greater supervisory role should have been given to the Inspector General of Taxation. Recommendation 13 calls on the Inspector to evaluate whether private rulings have a pro-revenue bias. This oversight role should have been extended to many of the other recommendations.

Very small businesses are granted a reduced amendment period for tax returns. But the Government has no standard definition of this element of the business community. It adopts very diverse definitions in different Acts. This increases uncertainty for small business. The Government needs to further justify its choice of the definition of very small business in these measures as the stated election to enter the Simplified Tax System.

These measures also leave a lot of unfished business. Recommendations 50 -54 simply call for further reviews by Treasury or the Tax Board on key issues like reducing the volume of the tax law. This is a weak response.

Labor will closely examine the legislation when it emerges. We will be working with business to identify areas for potential improvement.

Contact: Brendan Long 0408 421 447