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ATO clarifies claims made in recent media coverage

The Australian Tax Office is standing by its actions undertaken that were presented on a recent current affairs program.

The ATO says where taxpayers fail to lodge tax returns and BAS returns over a number of years despite repeated requests, the ATO will raise a default assessment based on evidence that can be obtained, i.e., cash deposits in their bank account and bank statements.

In circumstances where a taxpayer refuses to cooperate with the ATO such as refusing to provide basic information, the ATO can only work off their bank account.

Firmer action is undertaken where taxpayers fail to respond to a position paper put to them based on this evidence and where there are attempts to engage with such taxpayers for an extended period, i.e., giving them a chance to rectify their tax situation.

One such penalty is a mandatory 75% penalty where a taxpayer has failed to send the ATO GST or tax they have withheld from their employees’ pay.

The next step is to issue a garnishee notice for taxpayers who repeatedly fail to engage with the ATO, despite the Tax Office’s attempts to contact them and collect tax owed. If there is no response from them, the ATO will then issue a garnishee notice.

The Tax Office generally will not proceed with garnishee action if there is a current dispute.

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Expert advice on early superannuation access as a result of COVID-19

April 2, 2020

Under the coronavirus stimulus package released and revised by the Australian Federal Government on 22 March 2020, individuals in financial trouble due to the negative economic impacts of COVID-19 will be able to access their superannuation funds early. However, while the option is available, it is recommended that individuals only consider withdrawing from their super in the case of absolute emergencies and treat it as a last resort.

With the new rules on superannuation, workers whose incomes are reduced by at least 20% due to the COVID-19 outbreak are allowed to take $10,000 out of their super for the 2019-20 financial year and another $10,000 for 2020-21. Individuals will also not need to pay tax on any withdrawn amounts and existing welfare payments will not be affected either.

While the introduced early access to superannuation funds may be inviting for newly unemployed workers, it is important to consider whether the temporary relief is necessary and worth foregoing super funds available for long term investment. For example, even when accounting for Australia’s slowing economy in the coming years, $10,000 is predicted to be worth over $65,000 in another 30 years.

Especially for younger workers who are less likely to have access to other savings, the choice to give up future savings for current comfort is a difficult one. Experts instead are recommending Australians to apply for the other payments and benefits made available to vulnerable Australians through the coronavirus stimulus package, such as added $550 fortnightly supplements to Australians on JobSeeker payments and other welfare recipients and pensioners.

Experts also predict that the Australian Government will introduce more stimuli for increased cash flow in the Australian economy and more payments for unemployed, struggling and vulnerable Australians in the case of COVID-19 becoming more of a serious economic issue. Hence, withdrawing funds from your superannuation account should be considered a last resort and not for the sake of unnecessary temporary relief.

In addition to being allowed early access into individual super funds, superannuation minimum drawdown rates will also be temporarily reduced by 50% for account-based pensions and others similar until 2021.

The Government has also reduced the upper and lower social security deeming rates by a further 0.25 percentage points, with upper at 2.25% and lower at 0.25% which will come into effect on 1 May 2020.