Commissioner acts on deceased estates dilemma
The commissioner will exercise his rarely used remedial powers to allow tax agents access to deceased clients’ tax data, but practitioners could be left waiting for months before the fix is implemented.
With the impending closure of the tax agent portal on 29 November, tax agents will no longer have access to deceased taxpayers’ information through online services for agents.
The discrepancy between the two systems has surfaced because online services for agents has been designed to adhere to the letter of the law, which technically provides that only a legal personal representative (LPR) can access the deceased estate’s information.
The old tax agent portals had previously provided access to such information because the ATO had not been “keeping with the law for many years”, said Tax & Super Australia tax counsel John Jeffreys.
After a consultation process, the commissioner has now released draft legislative instrument CRP 2019/D1, which sets out to modify the Taxation Administration Act to allow a taxation officer to disclose protected information to the registered tax agent or BAS agent, or legal practitioner of an executor or administrator of an estate of a deceased individual.
This makes use of the commissioner’s remedial power, which gives the Commissioner of Taxation limited powers to modify the operation of tax law in circumstances where entities will benefit, or at least be no worse off, as a result of the modification.
The commissioner has only used such powers twice previously.
The Institute of Public Accountants general manager of technical policy Tony Greco welcomed the announcement but noted the lengthy process ahead.
“The only problem associated with this route would be the time frame, given that it is a legislative instrument that will need to be tabled, it will be likely that it won’t come into operation until next year.”
A legislative instrument can only take effect on or after the first day that the relevant legislative instrument can no longer be disallowed by Parliament, which is taken to occur 15 days after the instrument has been tabled in Parliament.
Looking at the draft sitting calendar for 2020, Tax & Super Australia’s Mr Jeffreys predicts that the earliest possible date that the legislative instrument can take effect will be 13 May 2020, barring any possible delays.
Mr Greco said the only other option was for the ATO to pursue a change in law, which would have been a “long-winding and cumbersome” process.
In the interim, the ATO will only provide access to a deceased client’s information where the agent is the LPR.
“Either option would have required a lengthy gestation period to get it up and running, and that’s the reality,” Mr Greco said.
“We knew it straight away, that’s why the ATO has put in a short-term fix and we’re working with that short-term fix and we think that’s going to be in place for a bit longer than what most people would desire, but that’s the reality of the situation.”