ATO - Division 7A - chance to get your house in order
This media release was issued by the ATO today:
“The Tax Office is giving business owners a one-off opportunity to correct past mistakes regarding payments and loans from their private companies and avoid penalties under Division 7A.
Recent changes to tax law give the Commissioner of Taxation discretion to disregard the operation of Division 7A in circumstances where an honest mistake or inadvertent omission has been made.
The offer applies to mistakes made between 2001-02 and 2006-07 and practice statement PSLA 2007/20 released today sets out how taxpayers can take corrective action to fix these mistakes.
“Until 1 July 2008, I am offering people the opportunity to correct past mistakes and omissions within the parameters of our new practice statement,” said Tax Commissioner Michael D’Ascenzo.
“People who follow the practice statement and include any outstanding interest or previously undeclared payments in their 2007-08 return can take advantage of the new changes to the law, without being concerned about further enquiries,” said Mr D’Ascenzo.
“This is an opportunity for taxpayers to take control of their own tax affairs and avoid the operation of Division 7A.” For some time the Tax Office has had concerns about whether business people were correctly paying tax on payments made for them or to them by their private companies.
“We’ve consulted with industry to develop an approach which allows people to resolve past mistakes in connection with Division 7A and to move on without worrying about penalties down the track,” said Mr D’Ascenzo.
“We are also working with the tax profession to help people understand and voluntarily comply with their obligations in the future.”
From 1 July 2008, the Tax Office will resume audit work to ensure payments made by private companies are correctly accounted for and company loans are not used to distribute tax free profits. “I strongly encourage people to take advantage of this opportunity.””
Online Resources: Division 7A Loan Agreement
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