previous
next

Other Aspects

22.104. On several other aspects of the system of tax instalment deductions the Committee does not propose to make firm recommendations. One of these concerns the difficulties in establishing the true identity of employee taxpayers at the employment point. An employee, with or without the connivance of his employer, may work under a false name. The recommended system of flat-rate tax instalment deductions for secondary or casual employment is likely to reduce tax evasion in this area. But if each adult person were to be given an identifying number to be used in all employment documents and in tax instalment deduction documents and tax returns, scope for tax evasion would virtually disappear. The Committee is aware of objections to any general system of allotting numbers to members of the population for purposes of identification, though it should be pointed out that such a system is in operation in the United States.

22.105. In the Committee's view the advantages of a system of identity numbers far outweigh the disadvantages, a matter mentioned earlier in paragraph 13.14. The obvious advantage in reducing tax evasion, and thereby conveying benefits by way of potentially lower imposts upon honest taxpayers, is in itself a major factor in favour of such a system. At 30 June 1974 the total amount of unapplied credit on Group Certificates was some millions of dollars. This figure represents tax instalment deductions made by group employers and included on Group Certificates issued to employees which the Taxation Office has not been able to match with returns lodged. Clearly this figure must include a substantial sum in respect of employees working under false names where there is not a corresponding return lodged: the tax correctly payable would generally exceed the amount deducted at source.

22.106. The Committee is also aware of the likelihood, under the present system, of false claims for dependent children in dependant declaration forms furnished by employees to employers, whether the employee is working under his true name or not. By this means an employee can substantially reduce tax instalment deductions or eliminate them completely. The proposal of the Committee in Chapter 12 that concessional tax allowances for children be replaced by benefits given solely through the child endowment system will eliminate claims for children in dependant declaration forms. This is a further point in favour of handling child maintenance benefits through the expenditure side of the Budget.

22.107. Finally, the question has been raised in submissions of the Australian Government paying interest on end-of-year excess tax instalment deductions due for refund. The Taxation Office endeavours to issue these refunds to a maximum number of taxpayers as soon after the end of the income year as possible, and by the end of October well over 80 per cent of refunds of excess tax instalment deductions have normally been posted to taxpayers.

22.108. The Committee has made recommendations that would enable any taxpayer concerned at the size of his expected refund to have the amount reduced. To calculate interest entitlements in relation to end-of-year excess tax instalments would


  ― 405 ―
be extremely expensive and might result in delays in making refunds to employee taxpayers. The Committee therefore does not favour the payment of interest.

previous
next