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The ATO has detailed what it sees as the future of the tax system with automation firmly on the agenda.
Speaking to Public Accountant, ATO second commissioner Geoff Leeper said the tax office intends to simplify the system as much as possible. While stopping just short of saying personal tax returns will be made optional, Mr Leeper admitted that’s something that is certainly in the ATO’s sights.
“From a taxpayer service point of view, we think it would be great if people with really simple tax affairs were able to, at some point, not have to worry about filling a tax return,” he said.
“On the income side – like income, interest, dividends – we can pretty well tell you right now what sort of relationship you’ve got with government in that space. What we don’t know though, is what deductions [you’ve got].”
To get around this, Mr Leeper said the tax office does have “some ideas” on the deductions side of things, hypothesising taxpayers could accept an offer of a certain amount of deductions – no questions asked.
However, he said “moving to a no touch return, or no need to lodge a tax return, government would need to focus on what it was prepared to do to make the deductions side of tax easier”.
“That’s an outcome that governments would need to think about, not the tax office, because it does have implications obviously for tax collections,” added Mr Leeper.
With regards to business tax affairs, the ATO has similar plans for simplicity. The main goal in this space, according to Mr Leeper, is to drive greater connectivity between businesses and the tax office.
“We need to write our tax reporting requirements in such a way that a software developer can incorporate them and business systems can generate information automatically that complies with the tax requirements, so you’re not extracting data from your business systems and entering it into a piece of software which then transmits it to the ATO,” he says.
“The data that you’re generating as a natural by-product of running your business is the data we will use to populate your tax returns and tax information.”
This automated connectivity, according to Mr Leeper, is expected to take shape in the next three to five years.
To read more about the ATO’s automation agenda in a feature from the October/November issue click here.