ICAA calls for amnesty on APSI tax penalties
The Institute of Chartered Accountants (ICAA) has joined the chorus of criticism of the Alienation of Personal Services Income (APSI) legislation.
The ICAA says it expects a public outcry against the legislation when the Australian Tax Office applies penalties to a large group of taxpayers unaware that the APSI legislation affects them.
According to the ICAA, there are 200,000 small taxpayers operating through a company, partnership or trust structure and will only learn about the APSI laws when they lodge their 2001 income tax return. The APSI legislation will have been affecting them since July 1, 2000.
ICAA chief executive Stephen Harrison says the new law is "a sleeping tiger that will attack the government in the same way the BAS did, if not handled correctly".
Harrison acknowledges that the motives behind the legislation were reacting to perceived taxation minimisation abuses, but he says it was introduced with little consultation and was not given the required priority of other recent tax reforms. As a result, Harrison and the ICAA will be pushing for the Tax Office to abstain from penalising taxpayers who might not be aware of the new laws.
"The ICAA calls for an amnesty on any penalties for the 2001 year and more community education before the Tax Office cracks down on taxpayers who are obviously unaware that the legislation affects them," Harrison says.
The ICAA's announcement comes within days of reports by the FPA that they have made headway in their discussions with the ATO about planners being deemed by the Corporations Law as holding a proper authority as a natural person. Under APSI legislation, this means any income derived within the practice is wholly that of the planner and is covered by personal services income rules and taxed accordingly.
The FPA is expecting a response from the ATO and the Prime Minister's office this week.
According to the Ralph report on business tax reform, the estimated gains from the new tax will be $380 million this year, which should rise to $480 million next financial year.
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