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03 Feb 12 On delayed processing of amended ITRs and refunds

MEMBER 8 writes:

"Urgent action is required by The Tax Institute to put pressure on the ATO & its systems to properly deal with taxpayers' refunds. Remember a refund is not a gift or grant from the government but in effect a repayment of a 'loan' that taxpayers have made to the government by paying too much tax upfront!

Details of a recent case is as follows:

  • 2010 amended return lodged 31st August 2010. Had to be lodged as paper return because the taxpayer had carried forward capital losses which disqualify lodgment of amended returns by ELS (another issue still to be rectified by the ATO!).
  • After a few progress follow up calls the return was eventually processed and credit shown on taxpayer's ITA on 17 November 2011 (77 days after lodgment!).
  • The credit was not paid out and further calls were required to chase it up.
  • It was eventually refunded on 6 January 2012 - more than 18 weeks after lodgment!
  • Refund was issued by cheque and not EFT even though the ATO did have EFT details for the ITA (which was confirmed before and after the cheque was issued). Normally wouldn’t be a big problem except the taxpayer was a non-resident and the refund was in excess of $70K!
  • More time wasted by us having to bank the cheque.
  • No interest was paid on the refund amount. More time wasted requesting interest be paid at the same time we sent an invoice for our time due to the ATO's maladministration – but have not had a reply to either.

Here is a further example of serious issues with the ATO's current processing system & delays in issuing income tax refunds:

  • 2009, 2010 & 2011 returns lodged by ELS together on 8 December 2011.
  • The 2009 & 2010 returns were shown as received and processed on 8 December showing refunds due for each year.
  • The 2011 return was processed on 13 December - also with a refund due.
  • Only the 2011 refund was paid out, the 2009 & 2010 refunds are still sitting in credit.
  • A request to issue the refunds lodged via the Portal on 17 January 2012 hasn’t resulted in any action, now requiring wasting 20 minutes speaking to 2 ATO offices to try and get the refunds issued. Standard response - they'll escalate it and get back to us after 14 (or 28 days).

Who do we charge for chasing up the ATO? - I'm sure the client won't be happy paying us for 20 minutes of our time following up ATO incompetence! As happens all too often, when put on hold the call gets cut off (so unless can pre-empt being cut off & get the officer's name & where from, have to go through the whole process again).

Why are the ATO showing returns as processed and showing credits on the ITA if the returns are still under review? If they continue to do so, they should put some indicator against the amounts that the issue of the refund is subject to further checking to save us wasting time following them up or telling our clients that it should only be a couple of days as the credit is showing on their account."

THE TAX INSTITUTE'S TAX COUNSEL STEPHANIE CAREDES COMMENTS: "The Tax Institute is aware of ongoing concerns with unnecessary delays occurring in the ATO's refund review process. The ATO is keen to quickly resolve these issues where possible in relation to outstanding refunds.

The Tax Institute urges all Members who are of the view that their client's refund has been unnecessarily caught up to contact us at With your permission, we will approach the ATO where you are able to provide your tax agent number and your client's tax file number (with your client's permission). All information provided to us will be treated in confidence.

In addition, we have raised this issue for the ATO's consideration at the next ATPF meeting in February 2012 and will keep Members updated on the ATO's response."

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