Accountants have disputed the Prime Minister’s claim that promised tax cuts of $1080 can be paid immediately from July 1 and questioned if the Australian Tax Office is being “pressured” to suggest otherwise.
Parliament now faces a tight timeframe to legislate the tax cuts to ensure that they can be paid from July 1. MPs are unlikely to return to Canberra before late June.
- READ more here on how the tax cuts drama unfolded and what the promised lump sum refund means for you
The release of the Pre Election Economic and Fiscal Outlook again raised the issue, noting that “the immediate relief to low- and middle-income earners … requires the relevant legislation to be passed before the increase to the low- and middle-income tax offset (LMITO) can be provided for the 2018-19 financial year”.
It said: “If not legislated prior to 1 July, 2019, the revenue cost of this measure would need to be reassessed.”
But PM Scott Morrison said the tight timeframe is not a barrier, because the ATO can “go ahead and admit the tax arrangements” before July 1 regardless of whether the legislation has passed – if Labor agrees in principle to support the changes.
Scott Morrison being cheeky suggesting if bipartisan support ATO had implemented tax cuts without legislation in past.
ATO statement we reported here very clear it won’t act on July 1 tax cuts unless they are already law | The New Daily https://t.co/2KL1KrFC86
— 𝕤𝕒𝕞𝕒𝕟𝕥𝕙𝕒 𝕞𝕒𝕚𝕕𝕖𝕟 (@samanthamaiden) April 17, 2019
Accountants warn the ATO ‘won’t hand out $1080 cheques without legislation’
CPA Australia questioned Mr Morrison’s claim that tax cuts can be delivered from July 1 regardless of whether they pass Parliament.
“They can’t do it,” CPA Australia’s Paul Drum told The New Daily.
“The ATO said they can’t change the tax withholding schedule now to make a difference. Well of course they can’t. If you think of the logistics. How many more pay periods are there?
“Our understanding is they can’t hand out cheques if there’s no legislation.
“Other times when they have made administrative arrangements it hasn’t been about an offset – that is handing out actual cash.
“I understand Treasury’s advice was you can’t hand out money. You can’t hand out refunds without legislation.
“It wouldn’t surprise me if the ATO might be being pressured by the government to say something else. If I was the government, I might be leaning on them to say, ‘Guys, make it happen.”
Freedom of Information requests have revealed that the ATO Commissioner Chris Jordan has resisted administrative “fixes” on tax cuts before they passed Parliament in the past.
“The ATO have clearly said we actually can’t do that. As a matter of practice, the ATO wants to administer the law of the day – not come up with special fixes that is outside their powers,” Mr Drum said.
Mr Drum raised the prospect it could even delay tax returns.
“A lot of things could happen. The ATO may not guarantee their two-week turnaround,” he said.
“What is more likely is later, if the legislation passed, they would send you another refund.
“It’s a bit messy.”
— Jim Chalmers MP (@JEChalmers) April 17, 2019
ATO could retrospectively amend tax assessments for $1080
The ATO warned again on Wednesday that it “could not issue assessments based on tax cuts until these are passed into law”.
“If the law for these tax cuts passes after June, we could also retrospectively amend assessments to provide the tax cut once the law is passed,” the ATO said.
That option could ensure workers secure the $1080, but possibly not from July 1 as promised.
It may also require the Morrison government, if re-elected, to split the tax bills because Labor will not support the tax cuts for high-income earners.
Parliament is likely to have just a week to pass the $1080 tax cuts in the final week of June. But if that doesn’t happen, the tax cuts could be delayed.
ATO warns it’s too late to change 2018-19 tax schedules
The recent evidence of ATO Second Commissioner Andrew Mills to Senate estimates also appears to contradict the Prime Minister.
Mr Mills said taxpayers’ final assessment notices could only reflect existing law, requiring Parliament to pass legislation for the offset amount.
The ATO said it was too late to change tax schedules for the 2018-19 taxation year.
“We need the absolute clarity,” Mr Mills said.
“There’s no chaos involved in waiting for a law to apply in order to implement something in an assessment,” he said.
Labor and PM trade blows over superannuation costings
Meanwhile, Bill Shorten was under pressure over the impact of its planned crackdown on super tax concessions on Wednesday.
Labor conceded the revenue impact was $30 billion, less than 24 hours after Bill Shorten claimed his party had “no plans” to increase super taxes.
The figure is substantially higher than the $19 billion that Labor had previously claimed. It is slightly less than the $34 billion cited by Mr Morrison.
Mr Shorten conceded he had “misunderstood” the question. He said he was referring to Labor’s pledge not to increase superannuation taxes beyond those previously announced.
“I thought I was being asked if there were unannounced changes to superannuation, and we’ve already made the announcements of the changes we’re going to make. But obviously we have changes which we outlined three years ago,” Mr Shorten said.
“I should have picked the words better, no question.”