GST Refunds - Review

The Inspector-General of Taxation (IGT) will conduct a review into the ATO’s administration of the GST refund process following concerns raised by various stakeholders.

Following the Full Federal Court’s decision in the Multiflex case back in 2011 the ATO cannot generally hold GST refunds for longer than is needed to process the GST return. However, legislation was introduced to allow the ATO to retain refunds for a longer period of time as long as there were reasonable grounds to do so and the taxpayer is notified.

The IGT’s review in this area will specifically consider the following concerns:

 A lack of clarity on the scope and nature of verification activities, including information requests;

 Inadequate engagement with taxpayers and their representatives;

 Inaccurate risk identification processes and inappropriate administration of the retention provisions including unexpected offsetting of GST refunds against future liabilities; and

 The adverse financial and emotional impact on taxpayers, particularly where the ATO does not fully appreciate their commercial arrangements as well as cash flow, working capital and profit margin implications.

The IGT is seeking submissions by 17 May 2017. The IGT is specifically seeking details of prior experience in dealing with the ATO on this issue as well as ideas for improving the current system.