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08 Feb 2019 Regarding Member 16’s comment ‘Client’s refund offset to another client’

TaxVine 3, 1 February 2019 

ATO response: 

Offset to debts of deceased estate 

Generally, a credit due a person in their personal capacity will not be offset against the debt of another taxpayer unless it is determined the first taxpayer is personally liable for that debt, for example, as executor of a deceased estate. We are happy to examine this particular case with Member 16and, if the offset was not appropriate in the specific circumstances, correct our actions. 

Offsets to BAS debts 

The Commissioner is required to allocate credits in accordance with the methods outlined in sections 8AAZLA and 8AAZLB of the Taxation Administration Act 1953 (TAA). Any excess following this allocation is then refunded. The Commissioner has a discretionary power to refund an amount instead of allocating this against a tax debt, where the debt is due but not yet payable (paragraph 8AAZL(3)(a) of the TAA). This means a taxpayer request the ATO release a credit prior to the payment due date of the debt (for example, BAS debt). We are happy to examine the specific circumstances of this case to ascertain whether it is appropriate to refund the credit. 

References:

  • PS LA 2011/20 Payment and credit allocation
  • PS LA 2011/21 Offsetting of refunds and credits against taxation and other debts.
  • PCG 2018/4 Income tax – liability of a legal personal representative of a deceased person
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