Treasury has proposed new legislation extending the time small and medium businesses have to self-amend their tax returns from two years to four years.
The legislation will amend the ITAA 1936, allowing these businesses up to four years after receiving an assessment notice from the Commissioner to request amendments.
Currently, the standard period for the Commissioner to amend an assessment for small and medium
business entities is two years. This shorter period was meant to provide quick certainty about tax liabilities.
“However, this timeframe has resulted in more objections and appeals, increasing the administrative burden on these taxpayers,” Treasury explained.
Treasury believes the change “will reduce the administrative costs for small and medium businesses by postponing their involvement in the cumbersome amendment process required after the current 2-year period ends.”
This amendment will also ease some administrative and financial pressures on the Commissioner.
Under the new provisions, the Commissioner can only amend assessments based on the taxpayer’s application.
“The provisions do not allow the Commissioner to amend the assessment for other details not included in the taxpayer’s application,” Treasury noted.
This measure is part of a broader set of small business initiatives from the 2023-24 Federal Budget, aimed at reducing paperwork and the time small businesses spend on taxes.
The government is seeking feedback on the draft legislation and its explanatory materials to ensure they clearly explain the policy and its implementation.
Treasury will collaborate with the ATO to identify areas where public advice and guidance may be beneficial for understanding and applying the new law.
Consultation on the draft legislation will end on 9 August.