Why is my refund less than expected?

As part of the ATO’s response to COVID-19 and other natural disasters, they paused the recovery of debts, including offsetting credits and refunds to debts on hold to support economic recovery.

As part of recommencing collection action, they’ve started to offset credits. This may include reactivating debts on hold.

When a debt is placed on hold it doesn’t appear as an outstanding balance on your account, as they’ve made the debt inactive. The ATO don’t act to collect it, but it is still payable.

When the debt is reactivated, it reappears on your account.

The ATO will notify you when they reactivate a debt that’s been on hold, either by calling you or sending you something in writing.

If you’re due to receive a tax refund or credit, such as from a tax return or activity statement, the amount may be less than you expected. If this is the case, it’s because any refunds or credits were used to reduce the balance of the debt.

Use Online services for individuals and sole traders via myGov or Online services for business to search for an offset transaction on your statement of account and for debts that remain on hold.

The ATO recognise some small businesses are experiencing difficulties due to recent natural disasters and the continuing impacts of the COVID-19 pandemic. They can offer tailored support and assistance, including deferrals and payment plans.

For further advice, speak to tax professionals like the tax champions at Paris Financial. Please don’t hesitate to contact our team on: (03) 8393 1000.

Source: ATO Newsroom