ATO welcomes report claiming GST refund efficiency

The Inspector-General of Taxation (IGT) Ali Noroozi said the ATO’s approach to GST refund verification is operating well, with the vast majority of refunds being released without the need for verification.

He added that, of those refunds that were stopped, over 50 per cent are processed and released within 14 days.

However, Mr Noroozi said he found potential areas of improvement to the ATO’s verification processes and to minimise any adverse impacts of refund retention on taxpayers.

“I have recommended that that ATO develop a framework of continuous improvement to its GST refund risk assessment tools as they currently have a strike rate of 26.7 per cent,” Mr Noroozi said.

“I have also recommended raising awareness of and improving access to assistance in cases of serious financial hardship, including full or partial release of GST refunds.”

The IGT said it made five recommendations to the ATO which were aimed at:

- developing a framework for continuous improvement of its automated risk assessment tools;

- streamlining its guidance to staff and implementing tools to assist them in complying with their obligations under section 8AAZLGA of the Taxation Administration Act 1953;

- enhancing its information requests to taxpayers and providing a channel for pre-emptive provision of such information;

- improving its notification of when taxpayers’ objection rights to the retention of refunds has been triggered and assisting them to lodge such objections effectively; and

- raising awareness of staff and taxpayers about financial hardship issues, appropriately considering them and enabling automated partial release of refunds.

It said the ATO has agreed in full or in part with all five recommendations.

Further, Mr Noroozi said it made a recommendation to government that “aims to strike a balance between ensuring refunds are released expeditiously in the majority of cases while affording the ATO sufficient time and power to address fraud risks, the seriousness of which has been established”.

In response, ATO deputy commissioner Jeremy Geale said the ATO is focused on supporting honest businesses to meet their GST obligations by offering help and assistance for them to get it right in the first instance.

“While the vast majority of GST refunds are processed and released without being stopped for verification, it’s important that we continue to review refunds we identify as high-risk to confirm they are legitimate,” Mr Geale said.

“At the same time, we will continue to target our compliance resources to identifying those who deliberately do the wrong thing.”