TAX NEWS - June 2010

Australia Tax: Taxing time for tax in crackdown

Reforms to the taxation law that reduce the powers of the Commissioner to amend a taxpayer's assessment and take the nation a step closer to having a single modern income tax law have been passed by Parliament.

Assistant Treasurer, Senator Nick Sherry said the new law repealed over 100 provisions in the income tax laws that gave the Tax Commissioner an unlimited period to make an amendment to a taxpayer's assessment.

Senator Sherry said repealing the unlimited amendment periods would provide more certainty to taxpayers in finalising their tax affairs.


Amendments modernise system

"These provisions allowed the Commissioner of Taxation to make an amendment to a taxpayer's assessment at any time in the future to penalise taxpayers for what may have been minor errors," Senator Sherry said.

"This is clearly not acceptable where taxpayers are simply seeking to comply with the law and they are not seeking to evade tax.

"The repeal of these provisions will ensure taxpayers' tax affairs for a particular year become final at the conclusion of the standard amendment period of two to four years - a much more acceptable outcome."

Senator Sherry said the finite amendment period would apply unless there had been fraud or evasion.

He said providing a consistent, defined time frame achieved an appropriate balance between ensuring taxpayers paid the correct amount of tax and providing finality and certainty for those who complied with their taxation responsibilities.

The Senator said other changes under the Tax Laws Amendment (Transfer of Provisions) Bill 2010 included new modernised areas relating to collection and recovery of income tax; forgiveness of commercial debts; luxury car leases; the farm management deposit scheme and the taxation of general insurance companies.

He said the new legislation rewrote several significant areas of the Income Tax Assessment Act 1936 into the Income Tax Assessment Act 1997.

Senator Sherry said the Government was committed to simplifying tax law to reduce complexity and compliance costs for taxpayers.

He said a Discussion paper, Review of Elections in the Income Tax Law, had been released as part of the tax reforms.

"This part of our progressive program of rewriting the tax law for a modern Australian economy removes 149 pages from the 1936 Act into the 1997 Act, and we've done it in just 101 pages, a reduction in length of a third," Senator Sherry said.