Calculating ATO interest
We currently provide the ATO interest data in the pre-filling report for individual taxpayers.
Year to date interest summary report – all entities
Previously, you may have used the Year to date interest summary report (YTD report) available in Online services for agents to complete your client's tax return. The YTD report is not intended to be used for this task as it does not accurately capture ATO interest data for the purpose of declaring deductions or assessable interest income. We have revised the interest descriptions so that they describe the nature of the interest being reported.
For help working out ATO interest deductions and income, see Calculate and report ATO interest.
Pre-filling report – individual taxpayers
The report sources ATO interest amounts from all client accounts in our integrated core processing system including the income tax, fringe benefit tax and integrated client accounts (ICA).
In the following situations, you may need to assess your clients' circumstance and adjust the interest amounts reported accordingly.
Recoupments of interest charged
When we report interest remission and credit adjustments as assessable income, we assume your client has claimed a deduction for interest that we imposed. If they haven't claimed a deduction and the period for requesting an amendment of their tax return to claim it has lapsed, they don't have to claim the interest income. You may need to adjust the interest totals we have provided.
Change in residency status
We report interest paid by the ATO based on your client's residency status when the interest data is extracted from their account at the end of the financial year. If they were a non-resident at the date of extraction, no interest paid data will be provided.
If they were a non-resident when we paid the interest, then we should have withheld tax from that payment. If this is the case, you don't have to declare this interest in their tax return. If tax was not withheld, you will need to declare the interest as income at item 10 Gross interest.
You may need to adjust the interest totals we have provided to remove or add the interest paid by the ATO. See Examples 5 and 6 in Calculate and report ATO interest.
Movement of transactions across ICA
We move transactions across accounts to undertake a few administrative actions (for example, to isolate pre- and post-bankruptcy transactions; and to isolate amounts that are in dispute). When a transaction is moved between accounts, the process date is reported as the date the transaction was moved. This means interest previously reported may be reported again in a later pre-fill report.
We have revised our business rules to prevent this duplication for 2018 and later years. You may need to adjust the interest totals we provide for the 2017 and prior years if your clients' accounts contain moved transactions.
You should check your clients' statements of account and other source documents to ensure the pre-fill data reflects their specific circumstance before lodging their tax return.
2016 and later income years
For the 2016 and later income years, we introduced a new way of capturing and reporting general interest charge, shortfall interest charge and late payment interest. This new process helps reduce the complexities that affected the calculation of ATO interest in prior years. You may need to adjust the 2016 pre-fill data, as this was the transition year for the new process.
We haven't changed how we calculate or report interest on early payment (IEP), interest on overpayment (IOP), or delayed refund interest (DRI).
If you choose not to rely on the new pre-fill reporting method, you will need to manually calculate your client's interest amounts using their statement of account.
In some circumstances, we may not provide pre-fill data but will display a message that the client has interest. In this case you will need to manually calculate the deductions or income amounts, using either the new or previous reporting method.
For more information, see Calculate and report ATO interest.
2015 income year and prior
ATO interest totals are not provided in the pre-filling reports for the 2013 and prior income years. A message will display advising that the client has ATO interest on their account.
You will need to refer to your client’s statement of account to manually calculate ATO interest.
The 2015 Pre-filling report was changed to a static report from 9 November 2015. This means any interest transactions processed on your client’s account after 9 November 2015 that impact interest totals in 2015 or an earlier year, will not be included in the pre-filling reports for those years. This means you may need to adjust the pre-fill data.
For information about how to account for any discrepancies, refer to Calculate and report ATO interest.
Interest from non-formal trust accounts
This affects years 2009 to 2024 inclusive.
Interest from non-formal trust accounts, such as children's bank accounts, may be matched to the trustee (parent).
Non-formal trust accounts with entity type 'I' (for individuals) are included for the pre-filling service. If the parent name forms part of the account name the record may be matched to the parent name. This is regardless of whether the parent's tax file number (TFN) is attached to the account. The provision of this income allows you to work out whether the income needs to be declared in your client's tax return.
Exclusions
For discrepancy identification purposes, non-formal trust accounts with the following words are excluded:
- '<Trustee name> ATF <beneficiary name>' if single trustee
- '<Trustee name and Trustee name> ITF <beneficiary name>' where multiple trustees.
Letters should not be sent to trustees of children's bank accounts where these name formats are used, although it may sometimes happen.
Non-individual investment income
This affects years 2009 to 2024 inclusive.
An individual client's pre-filling report may show an amount of investment income that belongs to a linked non-individual, such as a superannuation or trust fund.
This normally occurs if the entity's investment account has been established incorrectly. The interest or dividend income from these accounts will be incorrectly mapped to the individual client's record in our systems if their linked entity account has been established with either of the following:
- the individual's personal TFN quoted
- an entity type 'I' that is for an individual account.
Correct the record for the future
To prevent these records showing on future reports, ask your client to contact their financial institution to ensure the correct:
- TFN is quoted on the account
- entity type is listed on the account, for example, the correct entity type for a formal trust account is 'T', and for super accounts is 'S'.
This will not change what currently appears in the report unless the information provider sends us a replacement report.
Managed fund data reporting discrepancies
This affects years 2009 to 2024 inclusive.
Your client's pre-filled managed fund data may be different to the statement they receive from their managed fund.
We have found discrepancies between the information fund administrators send to their clients and the information they report to us for pre-filling.
This is an issue due to ongoing inconsistencies between the:
- Attribution managed investment trust member annual (AMMA) statement or Standard distribution statement (SDS)
- tax return and the reporting specifications.
The lead times that funds and digital service providers need to make changes to their systems can also contribute.
Tax agents have advised that even if this data is incorrect, they prefer to see it in the pre-filling report because it prompts them to closely check their clients' statements.
Which amount to use
If the pre-filled information doesn't match your client's statement, use the information the managed fund provided to your client. Contact the managed fund if you have any questions.
Multiple or duplicated payment summaries or income statements
This affects years 2009 to 2024 inclusive.
Multiple payment summaries or income statements may display in the pre-filling report, for example if your client has worked for the same employer for multiple periods during the year.
If the employer or payer has reported amended payment summaries or income statements to the ATO and has provided your client with an amended payment summary, income statement or letter, our processing systems for post-lodgment data matching should identify the correct payment summary or income statement.
However, the pre-filling report may show both the original and amended payment summaries or income statements.
This can occur when:
- an employer or payer has lodged a subsequent payment summary or income statement, such as an amendment, and not reported it correctly
- the pre-filling system has been unable to accurately match the replacement record against the original record. This may also be the result of some accounting software.
The pre-filling report displays the dates of all records to assist you to identify the correct record.
What your client should do
If your client disputes the records displayed in the pre-filling report, they will need to raise this with their employer or payer.
Reportable employer super contributions on payment summaries or income statements
This affects years 2009 to 2024 inclusive.
Employers may incorrectly include other amounts, such as super guarantee payments, as reportable employer super contributions (RESC) in the payment summary or income statement.
Reportable employer super contribution amounts can impact eligibility for some tax offsets. It can also result in Medicare levy surcharge being applied, affect eligibility for Centrelink benefits, and alter child support assessments.
Before lodging your client's tax return, you or your client should contact the employer to check that the payment summary or income statement figure is correct if both the following apply:
- your client's paper or pre-filled payment summary or income statement information includes an amount for RESC
- your client does not salary sacrifice super.
If the amount is incorrect, the employer must issue an amended payment summary or income statement to your client and any other affected employees. If they have already lodged their payment summary annual report with us, they must also lodge an amended annual report.
HELP and other income contingent loan debts
This information will assist in understanding the amount we pre-fill for:
- ABSTUDY Student Start-up Loan (ABSTUDY SSL)
- Australian Apprenticeship Support Loan (AASL) – previously known as Trade Support Loan (TSL)
- Higher Education Loan Program (HELP)
- Student Financial Supplement Scheme (SFSS)
- Student Start-up Loan (SSL)
- Vocational Education and Training Student Loan (VSL).
The repayable balance provided by pre-filling may be different to your client's account balance. The repayable balance does not include new debts until they become repayable. There is a lead time between when the debt is incurred and when it becomes repayable.
Indexation is applied to repayable amounts each year on 1 June.
The pre-fill amount displayed includes the repayable balance at 1 June, less any repayments made after that date.
If the pre-fill request is made between:
- 1 January and 31 May of the current year – the repayable balance will only include debts incurred up to (but not including) 1 January of the previous calendar year.
- 1 June and 31 December of the current year – the repayable balance will only include debts incurred up to (but not including) 1 January of the current calendar year. Detailed statements can be obtained on request.
Prior year amounts
If the pre-fill request is for an outstanding prior year return, the repayable amount is shown as at the date the pre-fill request is made. This means if a pre-fill request is made for a prior year return, the current repayable loan balance is shown and will be the repayable amount regardless of the income year of the return.