On 29 June 2012, the ATO sent a broadcast message to tax agents advising that the Taxation Administration Act 1953 (TAA) has recently been amended to provide it with the discretion to retain refunds while it undertakes integrity checks on claims.
This means that:
- The Commissioner of Taxation may retain an affected refund in order to verify it.
- If a client's refund is retained, the ATO will notify them within either 14 days (the running balance account interest day) or 30 days of lodgment of the return, depending on the circumstances.
- If the Commissioner fails to notify the client within the required time, the ATO cannot retain the refund for verification purposes.
- If the refund continues to be retained 60 days after the end of the 14 or 30 day period in which the ATO must notify the client that their refund has been retained, the ATO will notify them in writing, within 7 days of the end of the 60 day period, that this is the case.
- The 60 day period may be extended if the Commissioner requests information needed to verify the return from the client.
- The decision to continue to retain client refunds beyond the 60 day period is a reviewable decision to which the client can object under Part IVC of the TAA.