More power to hold refunds
Written on the 27 April 2012 by Macmillans Waller Fry - Accountants
Proposed legislation that would provide the ATO with increased power to withhold tax refunds could potentially affect the cash flow of small to medium enterprises.
The legislation, which was introduced into Government last month, would provide the ATO with the ability to retain refunds claimed by taxpayers for up to 60 days while authentication checks were processed.
The proposed law would be introduced to avoid fraudulent refunds and provide the Commissioner of Taxation with legislative discretion to delay refunds to taxpayers until claim verifications were processed to ensure the correctness of the amount claimed.
While the law applies to all taxes, there would be a particular effect on GST refunds claimed in Business Activity Statements. With many SME’s relying on refunds, GST specifically, to inject cash flow into the business, there would be a direct impact on these businesses with delays of up to and more than 60 days on the cards. Businesses and taxpayers can challenge withheld refunds, however this could result in unnecessary costs at the taxpayer’s expense.
Author: Macmillans Waller Fry - Accountants