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Monday, 4 June 2001
Page: 27226


Mr Kelvin Thomson asked the Treasurer, upon notice, on 4 October 2000:

(1) Is he aware that the ATO deducted company tax payments from GST refunds around 1 September 2000.

(2) Is he also aware that this caused some companies to make a “double payment” of company tax as some companies had already paid their company tax when it was due.

(3) How many companies had their company tax payment taken from their GST refunds.

(4) How many companies has the ATO had to make refunds to as a result of the double payments.

(5) What is the total of the extra tax collected by the ATO as a result of the double payments.

(6) How long did it take the ATO to refund this money to small businesses.

(7) Was interest paid to the affected companies; if so, how much.

(8) Did the ATO notify affected companies that it would deduct company tax due from GST refunds; if not, why not.

(9) What measures have been taken to prevent this occurring again.


Mr Costello (Treasurer) —The Assistant Treasurer has provided the following answer to the honourable member's question:

(1) Since 1 July 1999, the Commissioner has been required by section 8AAZL of the Taxation Administration Act 1953, to apply any payment, credit or surplus on an account against any taxation debt. Similar legislative provisions existed prior to 1 July 1999.

Accordingly, the Commissioner was required by the law to apply the business activity statement (BAS) refund to the company income tax instalment liability that was due on 1 September 2000.

(2) The Commissioner is aware that some companies had paid the company income tax instalments after their BAS refund was applied to those debts. This overpayment was refunded in cases where there were no other outstanding debts.

(3) to (5) Between 16 August 2000 and 4 October 2000, BAS refunds were applied to the income tax instalments of 1,946 companies. Of the 1,946 clients, 610 have had refunds repaid and the remainder have taken advantage of the ATO offsetting their GST credit to cover their company instalment. No extra tax has been collected.

(6) Any overpayment was refunded, or offset against other liabilities as soon as possible. The average time taken for all 610 refunds, between the date of the original offset and the repayment, was 28 days.

(7) Under the Taxation (Interest on Overpayments and Early Payments) Act 1983, no interest would be payable as a result of the offsetting of the BAS refunds against the company instalment.

(8) As this legislation has been in force since 1 July 1999, specific advice to the companies concerned was not considered necessary.

(9) This legislation was enacted to enable the more efficient collection of taxation debts, and to prevent taxpayers receiving a refund on one day and having a tax debt payable shortly thereafter. The legislation has now been amended to give the Commissioner a discretion not to offset amounts against a tax debt where the debt is due but not yet payable.