ATO discretion to retain refunds – recent changes
The tax law has recently been amended to provide the ATO with the discretion to retain refunds while they undertake integrity checks on claims.
The changes are designed to “support those doing the right thing and strengthen our ability to identify possible fraudulent activity”, although certain threshold tests must be met before the discretion can be exercised.
The amendment applies to:
- Refunds claimed on a Business activity statement (BAS); and
- Refunds claimed by full self-assessment taxpayers for income tax purposes (primarily companies and super funds);
but does not apply to individuals for income tax purposes, and normal processes for them still apply.
The amendments set out the steps the ATO needs to take, including notifying the taxpayer when a refund will be retained, and the relevant timeframes.