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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.

Posted on 3 May '18 by , under Tax.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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