"I have had two identical problems regarding 2009 personal income tax returns. In each case the client was paying quarterly ATO calculated PAYG instalments but did not pay the 4th instalment due to changes in their circumstances. I know they should have lodged variations but did not. I prepared and lodged their 2009 returns during the second week in August and they received their refunds in the normal manner which did not include the 4th quarter instalment. The assumption being that the debit and credit had been washed through although the assessment notice did not record anything.
By Mid September they each received an ATO letter demanding payment of the outstanding instalment in the integrated client account. Access to the portal showed the amount outstanding but no outstanding credit in the income tax account. I wrote to the ATO immediately, I refuse to ring them, explaining the situation. The only response was a further threatening demand a month after the first letter. I left the matter at this stage foolishly thinking that they were still correcting the position. Three telephone calls then came from ATO staff who clearly had no idea of the situation and the process involved and would not refer me to someone in authority who may have been able to help. I again wrote to the ATO detailing the situation on 4/12/2009. Subsequently the client received contact from a debt collector on his way to pick up the plasma TV or whatever to settle the "debt". On 06/01/2010 one of the clients received a letter from the ATO acknowledging that the instalment had not been credited. In bold type the following: "To ensure this situation does not occur in future years, please finalise all your activity statements and annual instalment notices before you lodge your income tax return for the same year". Silly me thought that the ATO finalised these statements on the 28th of the month as lodgment of a variation after that date would be rejected and in any case their system should cope with these situations.
Whilst agreeing that the client did not follow the correct process initially, it is clear that the ATO system is totally hopeless. The final doozie in this matter is that this client has received a cheque for $21.66 being interest on the amount of the instalment that was not credited from 20/08/2009 to 05/01/2001. Funny, they have not been charged interest on the unpaid instalment!!"