9 December 2005

Improvement to Tax Self Assessment System

Dealings with the Australian Tax Office will be easier and more certain for taxpayers under Howard Government changes to the self-assessment system which have now passed the Senate.

Assistant Treasurer Mal Brough said the legislation provides a better framework for the provision of ATO advice and introduces ways to make that advice more timely, accessible and binding in a many cases.

"Under the new framework, there is a higher level of protection and certainty for taxpayers who have acted in good faith and reasonably relied on Tax Office advice," Mr Brough said.

"While, under self assessment, taxpayers retain responsibility for the lawfulness of their own tax affairs, this measure will provide for more certainty by improving arrangements for taxpayers to find out the Commissioner's view about how the taxation laws might apply to their circumstances.

"This reform is a simple but important measure by the Government to improve the operation of the Australian taxation system particularly for those with relatively simple tax arrangements."

Mr Brough said amendment periods will also be reduced for a majority of taxpayers.

"The measure will ensure that the time during which taxpayers experience uncertainty about whether they have correctly self assessed their income tax liability, more accurately reflects their risk profile and the revenue consequences of an error in their assessment," he said.

"The changes will reduce amendment periods from four years to two years for most individuals and small business taxpayers. This measure will apply to amendments of assessments for the 2004-05 income year and subsequent years."

The new laws are part of the response to Government's Review of Aspects of Income Tax Self Assessment and apply from 1 January 2006 or on receipt of Royal Assent.

Mr Brough said that while the benefit of the law changes will apply almost immediately, he understood that it will take some months for the consequential administrative arrangements within the Australian Taxation Office to be implemented but he expected them to be in place before the next round of personal returns had to be lodged at the end of the financial year.