22/02/2000 - 21:00

Tax plan doesn’t add up

22/02/2000 - 21:00

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The brains trust at the Australian Tax Office has come up with a new trap for the unsuspecting. It sends bills which behave like the magic pudding – they keep growing from the day they are posted and are incorrect from the day received.

Tax plan doesn’t add up
The brains trust at the Australian Tax Office has come up with a new trap for the unsuspecting. It sends bills which behave like the magic pudding – they keep growing from the day they are posted and are incorrect from the day received.

The offending item is a process known as the General Interest Charge. That is a levy applied to naughty taxpayers who overlook tax assessments or pay them late.

Now, defending tax recalcitrants is not the job of Briefcase but there is a remarkable problem in the way the ATO levies its GIC. As well as applying a fine, the fine accrues interest from the time it is levied.

If this sounds complex, picture an example. On Friday, ABC Pty Ltd gets hit with a GIC of $100 for late payment.

Out goes the notice which includes the words that interest continues to accrue on a daily basis.

The letter arrives at ABC the following Monday. The manager pops down to the Post Office on Tuesday and pays the assessed amount – but, guess what, he’s wrong already because the GIC kept growing and in a few months time, he’ll get another notice with a fresh (admittedly smaller) GIC assessment.

What nonsense.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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