Why are credits and refunds being offset?

The ATO has reached out to small businesses who may have recently received a letter advising that they have a debt on hold and any credits or refunds would be offset against this debt.

As a result, such a small business may find that their refund or credit is less than expected.

The ATO has advised that this process of offsetting refunds or credits temporarily paused due to the pandemic and its financial impact on taxpayers.  However, the ATO has restarted offsetting refunds and credits to pay off debts on hold since June 2022.

The ATO also sent out ‘awareness letters’ to some not-for-profits and individuals in September 2022, similarly advising them they had a debt on hold and any credits or refunds would be offset against this debt.

Taxpayers can use Online services for business to search for debts that were previously put on hold and not included in their account balance.

A debt on hold remains payable and collection action may recommence if:

  • the taxpayer’s circumstances change, and the ATO has reason to believe they are now able to pay the debt;
  • the taxpayer agrees to pay their debt; or
  • the taxpayer has a refund or credit balance which will automatically be offset to their debt on hold.

Disclaimer
This publication is intended as a general commentary only and does not purport to be comprehensive. It should not be regarded as tax advice and you should not act solely on the information contained herein. Please contact AscendPoint to further discuss about your circumstances or concerns.

Why are credits and refunds being offset?