For some people the wait for their expected tax refund can seem to drag out! Many people are under the impression that once their tax return has been lodged via their tax agent that the refund is immediate, unfortunately this is not the case. We are seeing the ATO take significantly longer to process tax returns this financial year compared to last. There are a multitude of reasons for this which we aim to cover in this article, from different time frames for the type of lodgement to ATO system glitches, they are all playing a part in the delay.
So what are the ATO’s general timeframes for processing a return you ask? These vary based on the type of lodgement and are discussed below:
Paper Lodgement – Once sent, the ATO can take up to 2 weeks to receive the return. After the return has been received, the ATO can take up to 50 business days (not including weekends) to accept via their systems, prepare a Notice of Assessment and process the refund into your nominated bank account. Keep in mind, the return must be lodged by the 31st October the following financial year.
MyGov Lodgement – Is classified as a online lodgement, and generally follows the same timeline as when lodging through a tax agent. Therefore the timeframe for this type of lodgement is 12 business days to process a refund into the clients nominated bank account. However, this is if the ATO are on top of their processing and there are no holds on the clients account. The ATO will tell you it can take up to 28 days to process the return. Keep in mind, the return must be lodged by the 31st October the following financial year.
Through a Tax Agent – Once lodged with the ATO through the accountants processing system, it can take up to 24 hours for the return to be processed by the ATO and for it to show up on the clients Income Tax Account. From this date, the ATO suggests it should take 12 business days for the refund to be processed into the clients nominated bank account. This timeframe can change if the return requires manual processing, consequently processing can take up to 28 days. Returns must be lodged by the 15th of May the following financial year.
If your return has passed the general 12 business day turn around timeframe and you haven’t received your notice of assessment, nor have you received your tax refund there may be a delay for one of the following reasons:
– Your account with us is outstanding – We require payment of your Initiative invoice before we can lodge the tax return on your behalf.
– You haven’t returned your electronic lodgement declarations to us signed – It is illegal for us to lodge a tax return without consent from the client, if we haven’t received your signed ELD’s but you have paid your account unfortunately we still cannot lodge your return.
– Your bank details provided are incorrect
– You have an existing debt on your Income Tax Account from previously lodged tax returns that have not yet been paid – If there is an outstanding amount sitting in your income tax account from payable amounts in previous financial years, the ATO will immediately offset your account with the current years refund.
– You were previously insolvent – If you have previously declared bankruptcy or are currently subject to legal action regarding your finances, the return will need to be manually reviewed and could take up to 6 weeks to be processed by the ATO.
– You may have made an overstated/fraudulent claim – The ATO will need to deem that your deductions are true and correct, therefore your return may need to be manually reviewed by an ATO representative and the ATO should contact your tax agent with detailed advice regarding the expected delay.
– The ATO are managing an existing debt for yourself – If you have entered into a payment arrangement, or have an existing debt with another Australian Government Agency the ATO may have the legal authority to pay your refund to that governing body.
– The ATO are verifying information provided in your return, cross-checking information held on our systems and/or performing manual calculations – This includes: verifying a final return, calculating interest, verifying HELP debts and/or checking termination and/or lump sum information lodged.
– Your TFN has been archived – If there have been no activity on your income tax account for a period of time, your TFN may need to be reactivated by the ATO which will require more time to verify your details and process your return.
– The return is an amendment to a previously lodged return – While this process should not take longer than 30 calendar days, an amended tax return could take up to 20 business days to be processed by the ATO.
The ATO breaks down their processing of tax returns into several different stages, these stages will ultimately determine the timeframe in which your refund will be processed into your nominated bank account:
Stage One: IN PROGRESS
The ATO has received the return, and has started processing it. It usually takes around seven to ten days for a return to be finalised from this point.
Stage Two: IN PROGRESS – INFORMATION PENDING
The ATO is collecting information to help it complete processing of the return. This information may come from payers, financial institutions, private health insurers and so forth, and may take several days. The ATO may contact you either directly or through your agent (or both) if it needs some extra information.
Stage Three: IN PROGRESS – UNDER REVIEW
This status indicates that the ATO is looking at your tax account, including previous tax returns. There may be a delay to your income tax return while it completes its review. Again, it may seek additional information.
Stage Four: CANCELLED
The ATO is reviewing your tax return. This may include ensuring you have included all the information that has been reported to it. There is no need to lodge the return again.
Stage Five: IN PROGRESS – BALANCING ACCOUNT
Balancing accounts indicates that the ATO has the result of your return, and that it is calculating your refund (or bill) based on your account balance. The return may still take a few more days while it reviews your accounts with the ATO, but possibly also other Australian government agencies.
Stage Six: IN PROGRESS – PROCESSING
The ATO has finalised your return and is generating your notice of assessment.
Stage Seven: ISSUED – $ AMOUNT
The ATO will have sent your notice of assessment, and/or you’ll be able to see your notice of assessment in MyGov, along with the effective date for payment if you’re entitled to a refund. If you provided your Australian financial institution account details with your return, the ATO will pay the refund by EFT.
You are able to check the progress of your return after lodgement to see what stage it is at.
This can be done by:
a) Calling the ATO directly on 13 28 61 – have your TFN ready, choose option 3 then option 1
b) Check via your MyGov Account
c) Use the ATO App on your smartphone
d) Do a quick online search via the following link: (copy and paste into browser)
If you are in a hard financial situation and require your money immediately, you may be eligible to request priority processing. This does not guarantee a refund and could potentially result in a requirement to pay outstanding liabilities with the ATO for other government departments. You are able to see if you qualify as well as what steps you will need to take via the following link: https://www.ato.gov.au/general/financial-hardship/requesting-priority-processing/
We would also like you to know that if you have a payable in the current financial year, the return will not need to be lodged until the 15 th of May 2019. Therefore, we are able to hold off on lodgement until this date so that you have time to save for the payment. We will always ask you this when giving you the final estimate of your tax return.
As a general overview, your refund should not be taking longer than 12 business days to be processed into your nominated bank account. If your return has passed the 12 day period, and none of the above reasons apply to you be sure to check the progress of your return through any of ways listed above. If you are concerned with the stage of your return, please do not hesitate to contact us to follow it up for you!
Author: Taylor Mann