1. Prepare Tax Documentation for Individuals
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2. © National Core Accounting Publications
Chapter 15
Tax Administration
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3. Tax Agents – Regulatory Framework
The tax agent services legislation consists of:
Tax Agent Services Act 2009 (TASA)
Tax Agent Services Regulations 2009 (TASR)
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4. Tax Agents – Regulatory Framework
Tax Agent Services Act 2009 (TASA)
The TASA established the Tax Practitioners Board and provides for the registration and regulation of tax agents.
Registered tax agents must comply with the TASA, including the Code of Professional Conduct (Code) and civil penalties provisions.
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5. Tax Agents – Regulatory Framework
Tax Agent Services Regulations 2009 (TASR) The TASR contains the qualifications and experience requirements for registration as a tax agent, the application fees payable and the requirements to become a recognised tax agent.
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6. Tax Practitioners Board (TPB)
The national TPB is a statutory authority independent of the ATO, but funded and supported by the ATO.
Key functions of the TPB include:
Administrating the system of registration of tax agents.
Investigating applications for registration and conduct which may breach the Code of Conduct.
Imposing administrative sanctions for non-compliance.
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7. Ethics and Professional Responsibility
Code of Professional Conduct
The Code of Professional Conduct sets out the professional and ethical standards required of tax practitioners, including the obligations they have to their clients, to the TPB and in relation to their own conduct.
The core principles of the Code of Professional Conduct for registered tax agents are organised into the following five categories:
Honesty and integrity.
Independence.
Confidentiality.
Competence, and,
Other responsibilities, such as the proper administration of tax law and following the direction of the TPB.
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8. Tax Administrative Matters
Returns and Assessments Generally, income tax returns must be lodged by 31 October following the end of the year of income for individuals unless the taxpayer uses a tax agent. Special extension arrangements are made for clients of tax agents under the tax agent Lodgment Program.
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9. Tax Administrative Matters
Returns and Assessments – Amendments “Amendment” is the term the ATO uses for a change made to an income tax assessment. An assessment can be amended more than once. The amendment process is to correct a mistake or omission on a taxpayer’s income tax return made by either that taxpayer or the ATO. There are time limits for making amendments to a tax return, generally two years for individuals and small businesses and four years for other taxpayers.
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10. Tax Administrative Matters
Payment of Tax An income tax liability can be paid by mailing a cheque or money order with the payment slip to the ATO, by credit card using the Government EasyPay website or telephone service, at any Australia Post office by cheque, EFTPOS (subject to daily limits) or cash (up to $3,000), by BPAY®, or by direct credit or direct debit.
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11. Tax Administrative Matters
Tax Audits
When the ATO does a tax audit, it looks at the taxpayer’s tax affairs to make sure the information provided by the taxpayer is accurate, including whether the taxpayer:
declared all assessable income received.
is entitled to the deductions, credits or tax offsets claimed.
correctly withheld and reported PAYG amounts.
correctly calculated and reported other tax-related obligations.
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12. Tax Administrative Matters
Tax Audits
The ATO have separated tax audits into several categories.
The two main categories where there may be a shortfall amount, or debt owing, are:
reviews
audits
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13. Tax Administrative Matters
Reviews The ATO use reviews to investigate inconsistencies or risks about some activities, transactions or industries and try to confirm the risks. During a review, the ATO looks for ways to help the taxpayer comply with tax obligations. The ATO give the taxpayer the opportunity to correct any errors by making voluntary disclosure.
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14. Tax Administrative Matters
Audits The ATO uses audits to locate, measure and correct errors. Some audits follow on from reviews where the ATO has confirmed there was a risk. Some audits will commence without first doing a review where, from the available information, the ATO knows there is a risk.
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15. Tax Administrative Matters
Tax Rulings
There are six types of Rulings for income tax purposes and these set out the ATO’s interpretation of the law.
These are:
Oral Rulings.
Public Rulings.
Private Rulings.
Product Rulings.
Class Rulings.
Tax Determinations.
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16. Tax Administrative Matters
Penalties Taxpayers who fail to meet their tax obligations may be liable for penalties and interest charges. A penalty is an amount that is calculated using either a statutory formula (for example, most false or misleading statement penalties) or in multiples of a penalty unit. A penalty unit is currently $180.
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17. Tax Administrative Matters
Penalties A penalty may be payable where: • a taxpayer fails to lodge an income tax return or other document by the due date. • a taxpayer refuses or fails to provide information. • a taxpayer fails to keep or furnish records. • a taxpayer has a “shortfall amount” (i.e. an understatement of tax payable). • the Commissioner has applied an anti-avoidance provision. • tax is paid after the due date.
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18. Tax Administrative Matters
Anti-avoidance Legislation
Specific provisions
There are many sections of the income tax legislation that specifically target avoidance of tax (e.g. the substantiation rules).
Other legislation includes the Taxation Administration Act, the Crimes (Taxation Offences) Act, and the Commonwealth Crimes Act.
General anti-avoidance provisions
Part IVA ITAA36 (sections 177A to 177F) applies to avoidance schemes entered into which are of a “blatant, artificial or contrived” nature.
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