NO.037

MAKING IT EASIER TO COMPLETE INCOME TAX RETURNS

The Government will provide additional funding of $20 million in 2007-08 to enable the Australian Taxation Office (ATO) to pre-fill electronic individual income tax returns for the 2007-08 and following income years.

The pre-filling of tax returns will make completing income tax returns easier for around nine million individual taxpayers who use e-tax or lodge their returns through tax agents. These taxpayers account for around 80 per cent of all individual taxpayers. Nearly one million taxpayers will need to do no more than lodge their pre-filled return electronically. Millions more will need to provide only a few additional pieces of information to complete their returns.

The ATO will automatically include the following information in returns:

• salary, wages and allowances, where the employer has electronically lodged the employee’s payment summary with the ATO;
• dividend and interest income and distributions from managed funds;
• payments from Centrelink, the Department of Education, Science and Training and the Department of Veterans’ Affairs;
• Medicare out-of-pocket expenses and private health insurance information; and
• Higher Education Contribution Scheme and Higher Education Loan Programme details.

The ATO will progressively pre-fill this information as it is received. Most information is expected to be received by mid-August. This information will also be available to tax agents to help them complete returns on behalf of their clients.

In addition, for taxpayers who made a small total deduction claim in the previous year, the ATO will enter the deduction amounts from the previous year.

If taxpayers are satisfied that the pre-filled information is correct and they do not need to make changes or provide additional information, they can lodge their pre-filled return. Taxpayers with other sources of income, such as rental income, capital gains or foreign-source income, will need to add this information to their pre-filled return, as will taxpayers whose employer has not lodged their payment summary electronically with the ATO. Similarly, if taxpayers have additional information to provide, or offsets or deductions they wish to claim, these can be added to their return.

Only a small proportion of payment summaries are not submitted to the ATO electronically. Assistance to small business to help them report electronically will be part of the New Business Intensive Assistance Programme announced in the 2007-08 Budget (see Treasurer’s Press Release, Simpler Tax for Small Business). The Government is providing $40 million over four years to provide individually focussed advice and assistance to new businesses. This will include help with registering with the ATO business portal and completing the Business Activity Statement.

The ATO will seek to identify groups of taxpayers who may not have adequate access to the internet, and will develop alternative lodgment arrangements to assist them.

CANBERRA

8 May 2007

Media Contact: David Gazard: 02 6277 7340