ATO System Bungle - Tax Office Refund Delays

ATO Admits Delay in Processing Taxation Refunds

The Australian Taxation Office is under fire for a cost blowout in the upgrade to their processing system as well as serious delays sending out refund cheques. The ATO has also had to admit an embarrassing mistake of posting out more than 100,000 statements without refund cheques attached.

Thousands of individuals and families have been left without their refund money with some waiting for more than 3 months. And accountants and tax agents have been forced to lay off staff because of serious cash flow problems. Accountants and agents are often paid as part of the ATO refund.

This is what the ATO say in regard to the delays:

Processing status of stockpiled tax returns - latest update 15 April

Anyone who has not already lodged their 2008-09 tax return, and does so now, should receive their refund or notice of assessment within our normal service standards - 94 per cent of electronically lodged returns within 14 days and 80 percent of paper returns within 42 days.

However, I would like to provide another update on where we are in processing the returns we stockpiled due to our upgrade to the income tax processing system.

While we are experiencing some problems which unfortunately are affecting some people in the community we are working as hard as we can to resolve the problems.

To recap, we said we would issue:

236,000 notices of assessment during the week commencing 29 March and actually issued 170,000, and
150,000 notices of assessment during the week commencing 5 April and actually issued 240,000
In total, we have sent just over 1.1 million notices of assessment for individuals to people and overall 684,000 refunds.

Current issues and what we are doing

Last week we noticed an increase in calls from people who received a notice of assessment and were entitled to a refund, but the cheque was not included. Unfortunately, approximately 140,000 cheques were not printed. They are now being printed and will be with Australia Post by Monday 19 April.

We currently have around 100,000 returns from individuals that we estimate are over 30 days old in our system. Not all of these will generate refunds. In fact, we would anticipate roughly half might generate a refund, where the remainder would be tax bills.

While this is more than we would normally have on hand, it reflects the shorter processing time we have had given the need to stockpile any outstanding 2008-09 returns while we switched over to the new system. We are working hard to be back to normal processing service standards with this work as soon as possible.

The reality is that some cases take longer to process and we would always hold some up for legitimate reasons.

For example, we would not release refunds that appeared to be fraudulent or where people may owe money to the Commonwealth, for example, other agencies such as Centrelink and the Child Support Agency. Sometimes, we also check information reported in tax returns where we find discrepancies or need more information on particular claims.

Of the estimated 100,000, approximately 30,000 returns are in this category.

We understand our upgrade has caused frustration and inconvenience for some people and are doing everything we can to ensure any outstanding returns are processed as soon as possible.

For example, we have brought an additional 320 people, have extended work shifts and are working as much overtime as is possible. We are in the process of bringing on an additional 500 temporary people over the next few weeks.

We have been working hard to ensure we get refunds to people experiencing genuine financial hardship and to date have helped over 1,440 people. If people are in this situation we ask that they do not hesitate to call us on 13 28 61 and we will do everything we can to help.

In the information below you will find the answers to some of the questions we are hearing from tax agents and people who have been calling us.

David Butler
Second Commissioner