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Tax industry – no longer "Condition Red"?

As many members would be aware, the NTAA spends a lot of time and money in meetings and consultations with the Tax Office, Treasury and other government departments.

Lobbying and putting forward tax agents concerns and requirements is one of our prime concerns.

It goes without saying that the tax industry has had an "interesting" time over the past few years, but it seems that to all intents and purposes, things are beginning to settle for many tax agents and some of the pressure has been relieved all round.

To give it credit, the Tax Office has responded to many concerns that tax agents expressed and the new Commissioner and his administration seem to have put tax agents as one of their main priorities.

However, there are probably still three main ‘pressure points’ across the profession:

• the complexity and rapid changes to tax legislation;
• Tax Office's lack of understanding of pressures on tax agents; and
• the need to attract, recruit and retain quality staff.

In the short term, the first issue will probably continue to be a pressure point.

The Tax Office’s attitude seems to be more sympathetic to the plight of tax agents but the ATO culture as a whole has to change and appreciate that tax agents are not there to simply pick up the Tax Office’s work and do it for them.

As to the third issue, the Tax Office and the professional associations are working on this as an absolute priority and are looking at:

• increased input/involvement in tertiary courses and campus initiatives; and
• increasing the perceived attractiveness of the profession through a targeted marketing campaign.

After all, when you think about it, there are not many professions where you can hang up a shingle and clients start walking through the door from day one.

The Future

As we said before, the most critical issue for the future of the profession is the complexity of, and continual changes to the tax legislation.

The following are the major issues considered as either very or extremely important in relation to the future of the tax profession:

• the complexity of the tax legislation;
• continual changes to the tax legislation;
• professional indemnity insurance costs;
• regulatory compliance/tax administration burden;
• enforcement/penalties from the ATO;
• ability to recruit quality staff into tax practices;
• ability to retain staff in tax practices; and
• risk of litigation (by clients).

Well no-one said the system was perfect yet. Let us know what you think and we’ll try and keep pushing the right buttons with the ATO and Treasury. Email tax.admin@ntaa.com.au

Child care tax reform needed now!

Editor: As you may have gathered, we at the NTAA are not big fans of the childcare mess in this country. The following is another media release we recently issued about this.

The NTAA has today supported reforms to the tax treatment of child care costs that have been attributed to Senator Bronwyn Bishop.

That is, the NTAA believes that employers should not be subject to FBT (which is levied at 46.5%) on child care benefits provided to an employee.

However, the NTAA believes that the current child care tax offset should be scrapped and parents should be entitled to claim a full tax deduction for these costs.

Under the current rules, parents are entitled to a maximum tax offset of up to $4,000 per child when lodging their 2006 tax return and this is calculated at 30% of net child care costs.

Unfortunately, spiralling child care costs have meant that many parents are still out-of-pocket by thousands of dollars even after taking into account the tax offset.

Andrew Gardiner, spokesman for the NTAA today stated "In practical terms, the current rules provide an inequity between employees of large corporate employers (who can offer in-house child care that is FBT exempt) and those who are employed by small companies.

As a minimum, we believe that a "blanket" FBT exemption should apply for employers who provide child care benefits to an employee."

"The easiest way to reform the tax treatment of child care costs would be to make them fully tax deductible. Such an initiative creates a win-win situation. This is because parents will be financially advantaged should they wish to return to the workforce and employers will be more willing to offer child care benefits."

Tax agents that market themselves on higher claims

The NTAA has been getting complaints recently from some members about the practices of other tax agents.

For example, one member has clients coming to him, complaining that their friend's accountant claims a deduction for the entire amount of his travel allowances, even if he doesn't incur the expense.

The member was right in telling his clients that the reasonable allowance amounts set out in TD2006/43 are not automatically deductible. That is, the relevant expenses must still be incurred.

Unfortunately, there is not much we can do about these "rogue agents" but we can tell you that the ATO says that it certainly will.

The ATO is targeting this sort of behaviour and is performing statistical analysis on the claims being made by clients of all tax agents.

If it appears that the claims of clients of a particular agent are unusually high, the ATO says that, sooner or later, that agent and his/her clients can expect a visit.