Tax agents breath a sign of relief

TAX agents breathed a fleeting sigh of relief yesterday as the federal government remained tight-lipped on changes to the way tax returns are processed.

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TAX agents breathed a fleeting sigh of relief yesterday as the federal government remained tight-lipped on changes to the way tax returns are processed.

Moves for a radical change to the system were expected from the Henry review, with the nation's two largest tax agency firms preparing to be hit hard.

However, the government stunned accountants yesterday when it said it would announce changes to tax returns in "coming months", after focusing on

the Henry review's recommendations for mining, business and superannuation.

Tax accountants H&R Block and the Income Tax Professionals -- whose primary business is in individual tax returns -- were last week trying to re-market themselves to small businesses and tradespeople in view of the government's moves to simplify the way tax returns are calculated.

The office manager of ITP Maroubra in Sydney's east, Ervin Shultz, said he was "extremely relieved" on hearing yesterday's news of the stay on a tax return announcement. "Obviously if there are changes . . . it will cost us a lot of money," he said.

The government is expected to try to reduce the number of people using tax agents to complete their returns with a series of reforms that may include standard workplace deductions and investment in technology to enable the ATO to deliver pre-filled tax returns to most employees.

In its response to the Henry review, the government described the time spent negotiating the tax system as a "deadweight cost" on society that could be spent better.

"The government is interested in exploring ways to reduce the burdens the tax system places on working Australians, while maintaining their access to the appropriate tax treatment of legitimate expenses," the review says.

"The government will have more to say on this in the coming months."

Accountant John Fraser, from Narwee in Sydney's southwest, said he would not be significantly affected by the changes to tax returns. "I'm not too concerned, and who knows what's going to happen down the track anyway," he said.

Mr Fraser said that it would not be feasible at present for the ATO to pre-prepare salary earners' individual tax returns.

"I don't believe that their income-matching system at this stage is as good as it can be in the future," he said.