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Confused and worried by an ATO ‘good news’ letter

Friday, August 22, 2014

An ICA member received this letter from the ATO. It’s supposed to be a ‘good news’ letter requiring less BAS reporting (ie; less red tape) by our member. Our member is a professional, experienced editor. He knows a LOT about writing. But he was confused and a little worried that he might have done, or might do, something wrong! He went to his accountant to check (which cost him money of course!)

The original letter is here. We’ve reproduced the text below with an explanation of why our member was confused and even a little worried. (The letter is dated 1 August 2014 and was received by our ICA member on 6 August)

“We are writing to advise that from 1 July 2014 you will no longer be required to pay your income tax by instalments.”
Comment: Our member couldn’t understand why he no longer had to submit tax instalments. The back-dating confused him. He wondered if he’d done something wrong!

“You are still required to lodge and pay any activity statements or instalment notices not already lodged or paid by the due date.”
Comment: He was confused by this statement. He’d just been told he didn’t have to pay instalments but now he’s being told he has to.

“You should continue to lodge your tax returns.”
Comment: Yes, this makes sense! No problem here!

“A credit for any existing instalments will be included in your next income tax assessment”
Comment: What does this mean? He’s going to get money back? Why, our member asked.

“If you wish to continue to pay instalments towards your end of year tax liability, you may voluntarily re-enter PAYG installments by contacting the ATO on 132866.”
Comment: Um, okay our member said—but why would he?

“If you choose not to re-enter PAYG instalments, a change in your circumstances may require you to enter in future years. If this happens we will let you know.”
Comment: This is confusing, our member said. What does the ATO mean by ‘change in your circumstances’? What does the ATO know about me that I don’t know?!

In the end, our member sorted this out and was quite happy with the outcome. Simply put, his income is relatively modest and he now only needs to pay tax once a year instead of every quarter. That’s sensible and a good thing. But the ATO didn’t anywhere state this simple fact! Instead the letter is a bureaucratic construct which makes grand assumptions that people will know what the ATO is talking about.
Sam commented on 22-Aug-2014 09:02 AM
LOL. I got the same "good news" letter, despite the fact that I have been registered with ATO for years as not doing BAS or PAYG, and paying tax only once annually at the end of FY.

Go figure!
Fred (not his real name for fear of persecution) commented on 22-Aug-2014 10:15 AM
I had to laugh. I am working in a government department at the moment on a project to improve their business processes. They have said to me that the ATO has gone through this process and does things well. You think?!!
For some reason bureaucrats are so risk averse and so concerned about what they tell the great mass of untrustworthy citizenry (aka Australians) that they cant express themselves properly. This letter was probably the outcome of several meetings and revisions where the bureaucrat up the chain modified it to become progressively more meaningless. I am highly educated and I can only assume what it means.
Yes, red tape, doublespeak, and the hollowmen reign in Canberra.
Anonymous commented on 22-Aug-2014 03:48 PM
what's the problem? it covers various scenarios.
As it relates to a tax matter, you should seek advice from your tax advisor or accountant as to how it affects your individual circumstances.

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