Commissioner's new power to withhold refunds

Published on February 27, 2013 at 12:00 AM

Legislation is making its way through Parliament to give the Commissioner of Taxation a new power to withhold “high risk” refunds pending integrity checks of a taxpayer’s claim.

The changes are being introduced in response to court proceedings in which the Commissioner was ordered to pay a GST refund to a taxpayer, despite the fact that the outcome of an ATO audit was still pending. The proposed legislation is designed to address this by providing the Commissioner with a new legislative power to retain refunds in such circumstances.

It should be noted that the Commissioner’s power will apply to all refunds and claims arising under the tax law – not just GST. Some commentators have warned that the proposed measures are very broad and provide the Commissioner with the widest of discretions to withhold refunds.

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