As you will be aware the requirements of the Income Tax Assessment Act are strict, this memo is a formal reminder of the general provisions that apply to individuals and any related entities, consistent with prior years.
Self-assessment
Under the current “self-assessment” system, income tax returns are not necessarily subjected to technical scrutiny either before or after they are accepted with payment or before assessments are made, as the case may be. Rather, the returns may be accepted by the Taxation Office (“ATO”) as lodged and, if applicable, assessments issued based upon the taxable income disclosed.
Under this system, however, there are significant penalties for tax payers making false or misleading statements. Usually, the ATO has a limited number of years in which to make an adjustment in assessing a return or to amend a prior year’s assessment.
Where the ATO makes such an adjustment, additional tax of up to 90% of the amount of tax in question may be imposed, plus interest for “late payment”. Thus, there is considerable responsibility placed upon you as the taxpayer to ensure that a full and true disclosure is made of all income and expenditure items. Please note that the ATO undertakes data matching audit of incomes returned by taxpayers including dividend and interest checks.
Information required
To prepare income tax returns we will need information of the same nature as supplied in prior years. Thus, you may wish to review the 2014 return(s) and provide the information corresponding to that disclosed. Unless you are uncertain of the taxation implications of a particular receipt or outgoing, we generally do not require the related source documents (other than PAYG payment summaries and documents associated with them such as statements of termination payments).
To assist in this process, please contact us should you require us to provide you your ATO pre-filling report(s) which details the information received by the ATO (including payment summaries, government payments, interest income and dividend income). Should we supply you the pre-filling report(s), we ask you to check that the information is complete/correct and advise us of any discrepancies. If any of the information contained in the pre-filling report is incorrect, we request that you mark these on the pre-filling report(s) and return the report to us, as well as providing us the source documentation.
Please note that if you are a foreign citizen and were a temporary visa holder for the period during the 2015 tax year that you were a tax resident, you may qualify for an exemption from taxation for your foreign source personal income (e.g. interest or dividend income). Please contact us if you wish to discuss this further.
We have prepared a checklist that may assist in collating the necessary information, go to link https://minnik.com.au/online-tax-form/.
Please contact us for your password.
It is your responsibility to properly record matters relating to your tax affairs and to bring all of the relevant facts to our attention that you would reasonably expect to be necessary to enable us to undertake our services. The accuracy and completeness of the particulars and information provided by you rests with you.
We expressly exclude from our scope of work an examination of the information provided to ascertain whether or not it is incorrect or incomplete.
Any advice that we give you in connection with your tax affairs is an opinion based on the information that you provide and the knowledge that we reasonably have of your particular circumstances.
Substantiation
In order to be income tax deductible, certain expenses must be “substantiated”. An expense is substantiated only where you can produce a receipt, invoice or other documentary evidence indicating the name of the supplier of the goods or services, date, amount and essential character of the expenditure. Subject to certain exclusions, substantiation applies specifically to claims by employees for deductions of employment related expenses and to certain expense claims by self-employed persons. Some travel and car expenses substantiation requires a travel diary or similar document and a current car log book.
Lodgement Deadlines
As tax agents we are permitted to lodge returns of individuals, partnerships and trusts later than the date normally applicable; that is, later than 31 October of each year. However, in order to be eligible for this general extension, we have to comply with ATO lodgement rules which require that we lodge returns progressively from July onwards.
From 1 July 2013 the ATO has implemented a new tax agent compliance program aimed at ensuring that agents lodge tax returns progressively throughout the year in order to maintain their clients’ extended lodgement dates. The ATO has also indicated that they will be conducting regular reviews of agents’ lodgement statistics to ensure that clients’ tax returns are lodged in a timely manner. This has the effect of tax returns having to be lodged by 31 October if the ATO requirements are not satisfied.
Company lodgement deadlines can vary depending on a number of factors, although the most common dates are set out below for a 30 June balancing company.
| Last year turnover $10m or greater (with payment of the tax due by 1 December) | 15 January |
| Other companies with prior year turnover $2m or greater | 31 March |
| Other companies | 15 May |
Different lodgement dates may apply to companies that are non-taxable, act as the head company of an income tax consolidated group, were lodged late in the previous year or use a substituted accounting period. If you have one or more companies in these categories we will contact you separately to advise the due date for lodgement and payment.
Receipt of information from you
It is imperative that we receive the information in sufficient time to prepare your tax returns for the lodgement deadlines to be met. Otherwise it may not be possible to avoid late penalties. Whilst every effort will be made to avoid or reduce the penalties, we cannot guarantee this will be the case. As this firm is not responsible for this situation, no responsibility will be taken for penalties imposed.
In light of the above it is therefore very important that we receive your tax return information as early as possible to ensure that we meet the ATO’s more stringent requirements. We need to receive the information for individual tax returns in time to meet the 31 October deadline, or another deadline if that is advised to you.
Where you and/or your related entities do have other deadlines we will be in contact with you regarding the timing of receipt of your information to endeavour to comply with your requirements and to spread our workload throughout the financial year.
Administrative penalties
As stated above there are significant penalties levied on taxpayers by the ATO for false or misleading information and/or for late lodgement of income tax returns.
However these would not be levied where we, as your Tax Agent were provided with correct information (in the case of false or misleading statements) and the information was supplied to us in good time for us to be able to prepare the return, have it signed by you and lodged by the due date (in the case of late lodgement).
Please contact us if you have any queries regarding any of this information.