Australia Makes Several Tax Changes

March 18, 2010 Taxation in Australia

NSW slashes $3 billion - deficit $917MThe Australian Government has made alterations to the Goods and Service Tax (GST) legislation, aiming to improve compliance and lower taxpayer costs. In an effort to raise taxpayer certainty, the Government has also cut over 100 provisions within the tax laws, which had previously allowed the Commissioner of Taxation an indefinite time period within which to amend a taxpayer’s tax assessment.

In a media statement released on March 17th, Nick Sherry, Assistant Treasurer of Australia and Senator for Tasmania, announced the introduction of a bill which will make compliance with Australia’s GST laws more affordable and easier. The proposed changes consist of measures which allow entities to self-asses their eligibility to form or change a GST group or joint venture; clarifying rules surrounding entities leaving a GST group or joint venture by allowing for indirect tax sharing agreements; the adoption of general tax ruling system for GST and other indirect taxes administered by the Commissioner of Taxation; and a clarification and simplification of rules surrounding tax invoices.

On March 18th Nick Sherry revealed further changes in a media statement announcing the repeal of numerous aspects of Australia’s taxation legislation in order to ensure higher levels of taxpayer certainty, a core policy goal for the Government. The changes cap the time period for the Commissioner of Taxation to amend a taxpayer’s assessment to a maximum of four years. Prior to the change, the Australian tax laws allowed for an indefinite assessment period. Te finite assessment period will only apply in cases with no suspicion of tax fraud or evasion. Nick Sherry commented on the change, calling it a “great improvement.”

The latest announcement coincided with the release of the Inspector-General of Taxation’s (IGT) Review into Delayed or Changed Australian Taxation Office Views on Significant Issues report, which provided the Australian Tax Office (ATO) with five recommendations aimed at raising taxpayer certainty. The ATO was instructed to conduct an overview on the current tax system and ascertain whether it provides enough transparency for taxpayers. The report also recommended that the ATO clarifies its process of deciding whether new, old or clarified views are applied to a particular case; higher levels of community engagement be sought when altering tax legislation; and reducing the time between the identification of ATO concerns and them being addressed.

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