Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Ralph Willis, MP)Chapter 8 - Refunds on deposits
Overview
8.1 This chapter explains the circumstance in which an employer may make a request, or the Commissioner may decide, to refund a deposit made to the Superannuation Holding Accounts Reserve.
8.2. There are two situations in which a refund of a deposit from the Reserve may be made.
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- The first is where the Commissioner becomes aware that false or misleading information has been supplied or where there has been some other defect or irregularity in the deposit.
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- The second is where the employer notifies the Commissioner of some error in the deposit.
Explanations of provisions
False or misleading statements
8.3 Where a person paid or purported to pay an amount to the Commissioner in respect of an individual and that individual's account with the Reserve has been credited with that amount but the deposit form contained information that was false, misleading or had some other defect or irregularity, the Commissioner may decide to refund that amount to the person who made the payment. The Commissioner will action a transfer or withdrawal request (under Part 7) in preference to refunding the amount (under Part 8) to the employer. [Clause 72 of Part 8]
8.4 An employer makes a total deposit of $3,000 being $100 each for 30 employees. The deposit is initially accepted by the ATO, however, upon closer examination the Commissioner discovers that one of the entries on the deposit form relates to Mickey Mouse with the address being given as Disneyland. The Commissioner, knowing this information to be incorrect, decides to refund the $100 that relates to Mickey Mouse. This type of statement should be contrasted with that of a mistake where the employer merely spells the employee's name incorrectly.
8.5 As a consequence the employer will not be entitled to an income tax deduction for that amount. Where the employer has been allowed an income tax deduction the amount of the refund must be included in the employer's assesssable income in the year the refund is made. The employer may also be subject to a SGC for the year that the false deposit was made where Mickey Mouse was a false name for a real worker. A further consequence is that the employer may become subject to criminal liability under Part III of the Taxation Administration Act 1953 .
8.6 Where a person paid or purported to pay a deposit to the Commissioner in respect of an individual and that individual's account with the Reserve has been credited with that amount but the person who makes the deposit discovers that it contains an error, the person may request the Commissioner to refund that amount to the person who made the payment.
8.7 Requests for refunds must be made within 14 days of the amount being credited to the employee's account.
8.8 Where circumstances exist in which a refund may be made and an employee has requested to withdraw or transfer their account balance, the Commissioner shall give priority to finalising the refund request. [Clause 73 of Part 8]
8.9 An employer has 100 employees for whom he or she wishes to make a deposit of $100 for each employee. The total deposit is to be $10,000. The employer's salary clerk makes a mistake in relation to one of the employees and adds a zero making the deposit for that individual $1,000. Within 14 days the employer recognises the mistake and requests the Commissioner to refund the additional $900. The Commissioner may then refund that amount.
Example of a conflict between a refund and a withdrawal.
8.10 Where the Commissioner is investigating a suspected false and misleading statement in relation to a deposit and the individual whose account was credited with the amount in question requests the Commissioner to either transfer or withdraw that amount from their account, the Commissioner shall finalise the potential refund before processsing the withdrawal request.
8.11 Where a person makes a request for a refund of an amount paid in error and the Commissioner refuses the request the Commissioner must provide the person with a written notice of refusal.
8.12 Where an individual is entitled to be refunded an amount from the Commissioner and that amount is not refunded, the amount may be recovered as a debt due to the person by the Commonwealth by an action in a court of competant jurisdiction. This enables the individual to take action to recover the amount due to them directly through the courts rather than through other administrative processes. This will make it easier for individuals to recover amounts to which they are entitled. [Clause 74 of Part 8]