Tax Agent’s Game

Well, as you can imagine, with most businesses’ earnings down and the likelihood of anyone having to pay capital gains tax diminishing into the future as taxpayers carry forward their losses, the ATO are struggling for funds. So, to solve this problem, there have been a few subtle (and some not so subtle) changes that have drifted into the tax legislation recently. These include the ability of the ATO to hold on to refunds whilst they question every item in the return (9 months is the longest so far), the transfer of liability where returns are incorrect from the tax payer to the agent under the “safe harbour rules” (subject to various conditions), and perhaps most fun, the introduction of what could become a great reality TV game show where tax agents compete against each other to lodge their clients’ returns on time!

To explain the game further, as you will be aware, assuming your own return was lodged on time the previous year, anyone using a tax agent gets an automatic extension to lodge. For example the June 2012 returns for most need to be lodged by May 2013, rather than the standard date of 31 October 2012. Under the new rules, which the ATO claims will “help them support tax agents who are working efficiently”, from the 2013 year the extension will only be given to clients where their tax agent managed to get 85% of all the returns they lodge in on time the previous year. So now your lodgement date will depend on everyone else lodging on time. I am thinking perhaps a “name and shame” strategy would be appropriate, or perhaps encouraging clients to visit other clients who are potential late lodgers. Maybe the last lodger should buy all the other clients a case of wine! The possibilities are endless – hence the reason I can see this being made into a great reality TV show.

To help us know whether we are “working efficiently” the ATO will be providing tax agents with a variety of reports, perhaps a bar chart or two if we are lucky, showing whether we are on target. Based on previous years, I don’t envisage that we will have a problem (probably due to the vast amount of nagging that I do!) however as currently only 55% of agents currently achieve the 85% on time result,  I can’t help thinking that perhaps this is way of charging lots of late lodge net fines at $550 a pop. Imagine the tax agent who fails to reach target for the 2012 returns and then finds he has to lodge all 2013 returns by October 2013 to avoid fines!

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One thought on “Tax Agent’s Game

  1. i can see the emergence of a market for tax agents to trade “late lodgement futures” whereby efficient (>85% clearance) agents can sell late lodgement entitlements to less efficient agents (or should that be agents with less complient client bases?). Congratulations, Lindsay. John P.

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