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URGENT – Decision Impact Statement Update

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					                                                                                                   January 2009

URGENT – Decision Impact Statement Update

Updated Decision Impact Statement (DIS) – GST on Holdback

On 5 January 2009, the Australian Taxation Office (ATO) again updated their Decision Impact Statement (DIS) in
relation to GST on holdback. The most recent updates outline the application and timing of administrative
penalties and general interest charges that will be levied in relation to the amendments required by the ATO.
In previous DIS updates the ATO noted the following in relation to assessability of holdback income:
1        The ATO have advised that the refunds of GST associated with holdback are to be treated as
         assessable income in the year in which the holdback was derived (ie the year the refund relates to); and
2        Prior year returns need to be amended in accordance with the normal amendment rules set out in
         section 170 of the Income Tax Assessment Act 1936 (ITAA 1936).
The recent update notes the following in relation to penalties and interest:
1        Taxpayers will not be liable to an administrative penalty in relation to amending their previous returns as
         a result of the above decision; and
2        On the basis the taxpayer requests an amendment to their relevant income tax returns by the
         13 February 2009 any interest charges related to the shortfall will be fully remitted.

What tax years need to be amended?

The amendment rules state that the Commissioner may amend an assessment within 4 years after the day on
which he gives a notice of assessment to the taxpayer.
Based on this 4 year time limit, in most instances you will be required to amend only your 2004 and 2005 income
tax returns, provided these were lodged according to the ATO lodgement program. If tax losses were incurred
during the 2002 or 2003 years, this may require amendments to these returns as well.
As we operate under a self assessment system the assessment date will differ depending upon the following:
•        What type of taxpayer you are (ie trust, company or partnership);
•        Whether you had taxable income or a tax loss for the year in question; and
•        When the relevant return was lodged.
Therefore careful consideration and analysis must be undertaken in determining which years you will be required
to amend.

What do I need to do now?

Where we act as tax agents, we will contact you in relation to amending your prior year income tax returns and
discuss the amendment process. Should you have any concerns regarding your amendments, please do not
hesitate to contact any of the Fordham Motor Dealer Services team listed at the end of this update.




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When do I need to pay my amended tax assessment?

The ATO have advised that the payment of tax as a result of the amended income tax returns is due immediately
upon receiving the amended Notice of Assessment from the ATO. We will advise you at the time of lodgement of
your amended income tax returns in respect to your tax liabilities.

What if I delay lodging an amendment?

In our opinion, delaying lodging the request for an amended assessment until after the normal 4 year amendment
period has expired will not be effective. Section 170(1) Item 5 of the ITAA 1936 provides that the Commissioner
may amend an assessment at any time if he is of the opinion that there has been deliberate evasion.
In addition, if the request for amendment has not been received prior to 13 February 2009, any interest charges
related to the shortfall that were fully remitted, will be reinstated.

Conclusion

The amendment process can be a time intensive and exhaustive task, depending on your structure. As such,
assessing and amending your income tax returns as soon as possible is the best way to avoid penalties and
interest. In most cases, taxpayers will only need to amend their 2004 and 2005 income tax returns, resulting in
approximately 50-70% of their holdback refund being non assessable for tax purposes.


Should you wish to discuss this matter further, please do not hesitate to contact one of our Fordham Motor
Dealer Services team:



 T 9611 6611
 David Buckley                                                            Jeremy Jones
 Director                                                                 Manager
 E dbuckley@fordhamgroup.com.au                                           E jjones@fordhamgroup.com.au

 Frank Genobile                                                           Trudy Love
 Director                                                                 Manager
 E fgenobile@fordhamgroup.com.au                                          E tlove@fordhamgroup.com.au

 Aileen Fulton
 Director
 E afulton@fordhamgroup.com.au

Disclaimer: This periodical is general in nature and its brevity could lead to misrepresentation. No responsibility can be accepted for those who
act without first consulting and obtaining specific advice.




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