Announced in the 2024 Federal budget, the ATO will have additional time to review suspected fraudulent business activity statement (BAS) refunds prior to their release.
As per s 8AAZLGA(3)(a) of the Tax Administration Act 1953 the Commissioner may retain a refund if it would be reasonable to require verification of information, relating to the refund amount.
Factors determining retention of refunds
The factors the Commissioner considers in deciding whether to retain a refund are:
- the likely accuracy of the information – for example, unusually high or low claim amounts
- the likelihood that the information was affected by fraud, evasion or intentional disregard of a taxation law
- the impact of retaining the amount on the entity’s financial position – for example, solvency needs.
- the complexity that would be involved in verifying the information and whether the information provided by the taxpayer is consistent with information previously provided.
Retention periods
If the Commissioner decides to retain an amount, the taxpayer must be notified of the same. The ATO’s current retention periods are as follows:
- in the case of BAS refunds (running balance account surplus), 14 days after the taxpayer is notified
- or non-BAS refunds, within 30 days of the mandatory notification period
As announced in the 2024 Federal budget, the ATO’s current mandatory notification period for BAS refund retention will be increased from 14 days to 30 days to align with time limits for non-BAS refunds.
Next steps
This proposed measure provides the ATO the ability to combat fraud during peak fraud events like the one that triggered Operation Protego.
If you submit timely and accurate claims and expect legitimate refunds you will be largely unaffected by this measure. Any legitimate refunds retained for over 14 days would result in the ATO paying interest to you (as is currently the case).
If you have any queries in relation to this announcement, please feel free to contact our office for further guidance.
The team at EMspire Advisory are trusted, qualified Chartered Accountants, tax agents, and small business accountants. We work closely with our clients to achieve the best possible outcomes. To find out more, please contact us!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.