Review into GST Refunds – Report Publicly Released
The Inspector-General of Taxation (IGT), Mr Ali Noroozi, welcomes the release of his report into the Australian Taxation Office’s (ATO) verification of Goods and Services Tax (GST) Refunds.
The review arose from concerns raised through the taxpayer complaints and IGT work program about the ATO’s GST Refunds risk assessment tools and adequacy of the ATO’s engagement with taxpayers and their representatives where release of refunds is delayed.
“GST refunds can be critical to business cash flow — particularly for small businesses and those operating with low margins.” Mr Noroozi said.
Overall, the IGT has found that the ATO’s approach to GST refund verification is operating well with the vast majority of refunds being released without the need for verification and, of those that are stopped, over 50 per cent are processed and released within 14 days. However, the IGT identified some opportunities for improvement to the ATO’s verification processes and to minimise any adverse impacts of refund retention on taxpayers.
“I have recommended that the ATO develop a framework of continuous improvement to its GST refund risk assessment tools as they currently have a strike rate of 26.7%.
“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,” Mr Noroozi said.
Although the ATO’s approach to fraud risks in the precious metals industry is considered in the IGT’s recently completed review into the ATO’s Fraud Control Management, this report specifically examined the ATO’s use of GST refund retention to address such risks. Concerns were raised by stakeholders about the intensity and length of the verification process with significant delays being experienced before refunds were released or audit decisions issued. In this regard, the IGT observed that there seemed to be a mismatch in expectations between the actions taken by the ATO and taxpayers’ understanding of the process.
“I have made a recommendation to Government which 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.” Mr Noroozi said.
Overall, six recommendations have been made, five to the ATO and one to Government. The ATO has agreed in full or in part to all five recommendations.
“I thank all who have contributed to the review. The recommendations, when fully implemented, will improve the GST refunds verification process and minimise adverse impacts on businesses,” said Mr Noroozi.
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