Reply-in-five promise fails

THE Australian Tax Office’s Reply-in-Five GST response service has broken down - resulting in major confusion and potential financial cost for thousands of small business operators, says CPA Australia’s senior tax-counsel Paul Drum.

Mr Drum claimed the service had been unable to cope with demand.

He wants the ATO to urgently address the issue because the consequences for some businesses – particularly small firms – are dire.

“The Reply-in-Five service was set up to provide private rulings on GST issues for taxpayers on relatively straightforward transactions,” Mr Drum said.

“It was supposed to provide responses within five days but people are lucky to get responses within five weeks, let alone five days as promised.”

The service was set up to help business taxpayers, their advisors and accountants gain certainty in grey areas of GST transactions, through providing clarification about the law.

Given the enormity of the change to the new tax system, it has turned out that there are many instances where clarification still needs to be provided.

“If businesses can’t get the certainty they need in relation to GST-related transactions, they are more likely to be exposed to risk,” Mr Drum said.

“If the ATO comes in, does an audit and discovers the business hasn’t followed the letter of

the law, the business may have to pay the GST out of their own pockets, as well as being subject to interest and possibly penalties.

“This is a particular concern, given that there are indications that the ATO has already commenced auditing.”