Client: “Where’s my tax refund?” Explaining timeframes, key terms, and possible reasons for delays

 

For some clients, waiting for their expected tax refund can seem to drag out interminably, and some mistake receiving a receipt ID as a sign of an imminent ATO deposit into their bank.

So if you have a client who has a bad case of ants in their pants, the following could go some way to allay their tax refund anxiousness.

In most cases, documents lodged with the ATO online (including tax returns, refunds of franking credits and non-lodgment advice) should generally be finalised within 10 business days. (Note that if paper forms are used, it can take up to 50 business days.)

Generally, taxpayers can use the ATO’s online services via myGov to track the progress of their return as it moves through the following stages:

Stage Status and outcome
1 In progress

The ATO has received their return, and has started processing it. It usually takes around seven to 10 days for a return to be finalised from this point.

2 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 the taxpayer either directly or through their agent (or both) if it needs some extra information.

3 In progress – under review

This status indicates that the ATO is looking at your client’s tax account, including previous tax returns. There may be a delay to their income tax return while it completes its review. Again, it may seek additional information.

4 Cancelled

The ATO is reviewing your client’s tax return. This may include ensuring they have included all the information that has been reported to it. There is no need to lodge the return again.

5 In progress – balancing account

Balancing accounts indicates that the ATO has the result of your client’s return, and that it is calculating their refund (or bill) based on their account balance. The return may still take a few more days while it review your client’s accounts with the ATO, but possibly also other Australian government agencies.

6 In progress – processing

The ATO has finalised your client’s return and is generating their notice of assessment.

7 Issued — $ amount

The ATO will have sent your client’s notice of assessment, and/or they’ll be able to see their notice of assessment in myGov, along with the effective date for payment if they’re entitled to a refund.

If they provided their Australian financial institution account details with their return, the ATO will pay the refund by EFT. They should check with their financial institution to confirm processing timeframes.

What’s the difference between “processed” dates and “effective” dates?
In simple terms, the processed date is the date the ATO finishes processing a return and updates a taxpayer’s account.

If they’re entitled to a refund, the effective date is usually the date the ATO sends their refund to their financial institution. They’ll need to check with their financial institution to find out how long it may take to process the refund.

If they have a tax bill, the effective date will be the date their payment is due.

Their return has taken longer than 10 business days. What can they do?
The ATO has a lot of returns to process, and it says it does its best to process tax returns within 10 business days, but there are reasons why it may take longer. For example, if:

  • It needs to check information in a return. It may need to contact payers, financial institutions, private health insurers or the taxpayer themselves to confirm or cross-check information in their return. A taxpayer generally doesn’t need to take any action – if the ATO needs any additional information, it will let them know.
  • The taxpayer has lodged tax returns for several years all at once. The ATO needs to process all of their returns so it can make sure their account is up to date before it issues any refunds or requests for payment.
  • The taxpayer has entered into a debt or bankruptcy arrangement. If they have declared insolvency or entered into a Part IX agreement, the ATO needs to undertake additional checks before it can finalise a tax return. See this ATO web page for more information about what is necessary in the face of insolvency before any tax returns are lodged.
  • The ATO needs to check with other Australian government agencies (such as Centrelink or the Child Support Agency). By law, the ATO is required to pay part or all of your tax refund to other agencies if there are outstanding amounts. It is obliged to write to taxpayers to let them know if this is the case.

Where possible, the ATO will let taxpayers know if it needs them to take any action, especially if it needs extra information in order to process a return.

Tax refund needed to pay outstanding bills?
There are times when people experience serious financial hardship, and often rely on their tax refund to help pay for essential goods and services. If a taxpayer can demonstrate that they’re experiencing serious financial hardship, the ATO may be able to process their return as a priority – find out more here.