In a bid to cut red tape for Australia’s individual taxpayers with simple tax affairs the Australian Taxation Office will offer an online tax assessment instead of lodging an individual return. This could affect 9 million taxpayers and will commence in the 2008 tax year.

The ATO will pre-fill electronic returns with information on:

  • salary, wages and allowances, where the employer has lodged the employee’s payment summary electronically with the ATO;
  • dividend and interest income and distributions from managed funds;
  • payments from Centrelink, the Department of Education, Science and Technology 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.

Taxpayers with additional sources of income, such as rental income, capital gains or foreign-source income, will need to augment their returns with that information, as would individuals whose employer had not lodged payment summaries electronically with the ATO.

This measure will make completing income tax returns significantly easier for the 80 per cent of individual taxpayers who use e-tax or lodge their returns through a tax agent.

In other budget tax news the government will provide $40.0 million over four years to enable the ATO to increase support it provides to new businesses, particularly those that prepare their own Business Activity Statements, with effect from 1 July 2007. This measure will enable the ATO to conduct more face-to-face visits and telephone visits to new businesses, assisting them to understand their GST and other record keeping obligations and to develop good record keeping procedures.

People who owe the tax office money can expect some attention over the next few years too. The Government will provide $125.7 million over four years to help reduce the existing stock of taxation debt and outstanding superannuation guarantee charge payments owed by employers. Strategies such as after hours contact at home is expected to be part of the new initiative.