The Australian Tax Office (ATO) will save around 1.4 million Australians the hassle of filling in annual tax returns next financial year.
According to the Australian Financial Review (AFR), the ATO will offer as many as 1.4 million Australians new 'push' tax returns, with details already filled in for them and ask taxpayers to tick Yes or No.
Instead of the online tax system e-tax, which allows taxpayers to fill in and lodge their annual tax returns digitally, push tax returns will be sent out to taxpayers with details such as income earned, tax paid, Medicare claims, bank interest, shares and dividends already completed for them.
The ATO already pre-fills this information for taxpayers using the e-tax system, but the new push tax returns, means taxpayers will have much less work to do. The AFR reports that the ATO's current prototype has reduced the number of screen pages from 140 under the current e-tax system to just 10 pages, and reduced the time taken to complete to just 20 minutes in initial testing.
The ATO's move follows the lead set by countries like Denmark and Norway, which send around 75% of tax returns to the taxpayer. ATO second commissioner Neil Olesen has told the AFR that with careful and creative thinking, the system could eventually liberate around 4.5 million taxpayers from any significant response burden at tax time.
The AFR estimates that as much as 75% of taxpayers use tax agents to file their tax return, ranking Australia as one of the highest in the world to use tax professionals for individual tax affairs. The new push tax system could negatively affect accountants and the tax professional industry, with fewer taxpayers requiring their services. Although CPA Australia head of policy Paul Drum has welcomed the ATO's move, saying it would be very good for taxpayers with simple tax affairs.
At the same time, the ATO is targeting large companies and wealthy individuals, including a deal by Macquarie Group (ASX: MQG) that allowed the investment bank to record a profit of around $850 million. A former chairman of Sunland Group (ASX: SDG) and directors of listed investment company CVC Group (ASX: CVC) are also reported to have been arrested recently on money-laundering charges for using an offshore tax evasion scheme.
Foolish takeaway
It's good news for taxpayers with simple returns. For those with more complex tax affairs, relief may be coming in the near future.
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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.
