A summary of our work for TaxTime 2010

National Tax Liaison Group – TaxTime 2010 updateNational Tax Liaison Group – TaxTime 2010 update

Working to make sure our new processing systems are fully functional for new legislation 2010

• Continuing to refine and improve our change management processes across all systems to ensure interoperability

• Ensuring contingency plans are in place to continue processing work on hand

• Clearing existing workloads to start the new processing year with minimal stock

• Maintaining a flexible workforce that can be mobilised to meet demand as required

• Working with business partners (such as Australia Post, Salmat, Optus etc) to ensure their contingency arrangements match our system requirements

• Ensuring we accommodate the needs of business partners for timely information regarding processing, printing and postage schedules

• Working closely with software providers to ensure that software changes and updates are fully functional

• Tax Time 2010 Pilot preparations underway

• Testing of all ELS Take-on changes for Tax Time 2010 have been successfully completed and Software Producers registrations are progressing well

• Portal changes (mainly Pre-fill) are complete.

National Tax Liaison Group – TaxTime 2010 update UNCLASSIFIED

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Payment Summary Changes

Foreign IncomePayment summary covers periods of assessable foreign employment, as well as individuals working in the Joint Petroleum Development Area in the Timor Sea.

Business & Professional ItemsThis payment summary has combined three payment summaries:

• Voluntary agreement• Labour hire and other specified payments • Personal services attributed income.

Individuals payment summary – new labels• Reportable employer super contributions• Exempt foreign employment income• Deductible amount of the undeducted purchase price

of an annuity• ‘Other income' label removed as it is no longer necessary.

Reforms to Income TestsThree new income tests will be used when calculating tax offsets and obligations:• Adjusted taxable income (ATI)• Rebate income• Income for surcharge purposes

Employee Share SchemesTaxpayers can no longer elect when they will be taxed on the discount. Scheme structure to determine whether taxpayers will be taxed upfront or on deferral.

Entrepreneurs’ Tax OffsetAn income test has been introduced to reduce the amount of entrepreneurs’ tax offset individuals will receive where their income for entrepreneurs’ tax offset purposes is more than:

- $70,000 if they are single (with no qualifying dependant), or - $120,000 if they had a qualifying dependant on any day during the income

year or had a spouse on the last day of the income year.

Limit exemption of income earned in overseas employment (23AG)Foreign employment income will only be exempt if an individual has earned the income as an aid worker, a charitable worker, under certain types of government employment or on projects that are in the national interest.

Non commercial lossesIncome test in place from 1 July 2009, restricting circumstances where a business loss can be claimed as a deduction against other income.

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Pre-fillingThere are a number of small additions this year, including:

• Pre-filling of union fees and workplace giving where reported on payment summaries

• A message where returns for any of the last 3 years are outstanding

e-tax• Reminder for taxpayers who change their

address to inform their super fund to avoid lost super

• Improvements to the Senior Australians Tax Offset claim section

• Reviewing and improving the vision impaired version of e-tax

Super co-contributionsCollecting enough details from tax returns to more accurately assess super co-contributions entitlements. This year we will sort amounts on tax returns into eligible income, ineligible income and assessable income.

Publications moved to web• Partnership tax return instructions• Trust tax return instructions• Thin capitalisation schedule 2010

Fraud detectionFrom 1 July 2010, all individual income tax returns will be evaluated by fraud detection models. A very small proportion of tax returns are stopped because they are identified by these models as being at risk.

For tax agents this will represent about 0.2 – 0.3% of tax returns lodged. These tax returns will be held until manually assessed by compliance staff. For all other returns, no increase in the average processing time is expected (compared to last year).

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