(1)   Has the Australian Taxation Office ATO begun implementing improvements to its systems to better match the risk issues associated with paying GST refunds.

(2)   Is there a conflict between paying GST refunds in a timely manner and preventing fraudulent or incorrect refunds; if so, how does he intend to resolve it.

(3)   What proportion of GST refunds were not issued within 14 days in

(a)   2003-2004,

(b)   2004-2005, and

(c)   2005-2006 to date.

(4)   Is it common for a company to have its GST refund manually checked every time it lodges a claim.

(5)   Does the ATO notify a business if its refund has been delayed.

(6)   Can he say whether any business has suffered cash-flow or capital funding problems because its refund was delayed.

(7)   In respect of the 205,000 individuals and businesses which were overcharged penalty interest arising from audits before 2000,

(a)   have they been contacted,

(b)   what sum was mistakenly collected,

(c)   have the taxpayers been repaid or compensated,

(d)   has any individual or business become insolvent as a consequence of being overcharged,

(e)   since the mistake was discovered, has consideration been given to having the ATO’s formulae independently verified, and

(f)   before the mistake was discovered did any of the taxpayers contest their liability for penalty interest in the courts.

(8)   What systems are in place to ensure taxpayers are not overcharged in the future.

(1)   Yes. As part of its risk management approach, the ATO has established processes to risk assess certain categories of GST refunds.

(2)   The ATO continues to balance the need to verify activity statement refunds prior to issue, with the need to meet community and Government expectations that appropriate refunds are issued to the right person in a timely manner. Strategies have been developed (and are continuously reviewed) to address this balance.

(3)   Activity statement refunds not issued within 14 days (against a benchmark of 92% issued) were: 2003-04 5.6% 2004-05 7.9% 2005-06 (at 3/3/06) 7.18%

(4)   As part of its risk management strategy, the ATO risk assesses certain categories of taxpayers based on their tax history. Where this history includes regular refund claims that are in line with the client’s historic refund pattern, the ATO will not hold up a current refund for verification purposes.

(5)   Yes. The ATO notifies large enterprise taxpayers by email where their activity statement refund is delayed for verification, this email includes the name and contact details of the taxpayer’s key client manager. For all other taxpayers, the ATO notifies them by telephone that their activity statement refund will be subject to verification; the benchmark for this contact is within 48 hours of the intervention.

(6)   The ATO activity statement processes are aimed at minimising the potential of adverse cash flow or funding impacts.

(7)  

(a)   The ATO issued a press release on 15 December 2005 and has started to correct the accounts of those affected. Explanatory correspondence will be sent to taxpayers along with any appropriate amended assessments as accounts are corrected.

(b)   Based on its work to date, the ATO estimates the revenue impact as being between $150 - 180 million.

(c)   The ATO is in the process of correcting accounts of affected taxpayers and expects to complete the process by 30 September 2006. All affected taxpayers will be entitled to a credit for the amount of overcharged interest. For taxpayers who have paid the incorrectly charged interest, compensation will also be paid at prevailing base interest rates for the affected periods.

(d)   The ATO is not aware of any taxpayer who has been made insolvent solely due to the over charged interest.

(e)   The ATO is subject of external scrutiny through the Australian National Audit Office (ANAO) program of audits. The ATO has involved the ANAO in its strategy and processes for rectifying the error.

(f)   Other than the case which highlighted the error, the ATO is unaware of any cases of disputed liability to penalty interest being pursued in the courts.

(8)   Corrections have been made to ATO computer systems; any cases amended from 24 September 2005 have had the interest correctly calculated.