Monday, June 06, 2011

Tax Pack - the disaster that actually frightened away taxpayers

It was meant to empower us

Tax Pack was a disaster for the Tax Office. Introduced two decades ago in order to empower ordinary Australians to prepare their own tax returns rather than using agents, the magazine-style document did the exact opposite.

Ahead of the new tax year Commissioner Michael D'Ascenzo has told a Senate hearing the package led to an increase rather than a decrease in the number of people using accountants to prepare their returns. The agents themselves were partly to blame.

“In the very first edition of Tax Pack we used plain English terms,” he told the Senate. “And there were a lot of complaints from professional bodies that the plain English terms were not precise. We started to use precise terms and what happened since then was a spike of people moving from doing their own returns to using tax agents.”

“Basically what we found is you can bamboozle ordinary taxpayers by trying to be too legalistic and trying to cover every situation.”

The introduction of e-tax where much of the details are hidden behind links on computer screens and has reversed the phenomenon.

“From a high of 75 per cent of individual returns going to tax agents, we are now down at around 71 per cent,” Commissioner D'Ascenzo said...

This year more data from employers, banks and share registries will already be “pre-filled” on electronic tax returns meaning much of the work for people using the system will already be done.

“We are encouraging organisations to send data to us earlier than they are legally required to,” said first assistant tax commissioner Sue Sinclair. “Most of the data we receive from banks and other institutions is made available within 24 hours, so pre-filling is ready to go much closer to the tax time starting gate.”

This year for the first time taxpayers using e-tax will receive pre-filled data from Centrelink relating to paid parental leave and eligibility for the education tax refund.

Ms Sinclair said this year the Office would pilot pre-filling information about share sales “to remind taxpayers about capital gains tax events which may have occurred during the year”.

A record 7.9 million web users used pre-filled data provided by the Tax Office rather than providing their own in 2010, an increase of 13 per cent. Most would have been tax agents, “a strong indication that most agents now use the pre-filling service as part of their everyday practice”.

Ms Sinclair said the computer problems that plagued the Tax Office in early 2010 were in the past. The system was now issuing more returns each month than ever before.

Published in today's SMH and Age

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