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Incorrect general interest charges have been applied to a number of existing tax debts as the ATO pins its latest error on its recent system changes.
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Tax Office owns up to incorrect GIC calculation
10 March 2020
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9 minute read
Accountants Daily understands that the ATO has now sent out erroneous tax debt notices to taxpayers, warning them to pay incorrectly applied unpaid general interest charges (GIC).
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Apologising for the error, the ATO has now advised that taxpayers and their tax agents will not have to act on the mistake.
It is understood that the ATO is working to ascertain the amount raised and the number of taxpayers affected.
The ATO has acknowledged that the glitch comes from its recent Activity Statement Financial Processing (ASFP) project, which saw more than 17 million activity statements and franking deficit tax accounts move into the accounting system currently used for income tax.
“Following a change to the system we use to process activity statements in January this year, we identified some taxpayers who had a general interest charge (GIC) incorrectly applied to their accounts,” an ATO spokesperson said.
“We are resolving this as a priority and are in the process of remediating the affected clients’ accounts. The ATO will work with affected clients as appropriate and will ensure that no collection action will be taken on these accounts.
“No action is required from taxpayers or their representatives, and accounts will reflect the correct balance once remediation is completed.”
The incorrect tax debt notices come after the professional accounting bodies had previously warned that potential hiccups might appear in the wake of the “massive” account system migration.
ATO commissioner Chris Jordan had earlier said there were no guarantees that the ATO’s systems would be perfect in the future, despite the establishment of its Improving ATO IT Systems (IAIS) Program.
The IAIS Program was initiated after the ATO was rocked by system unreliability issues between December 2016 and February 2017, leading to the House Standing Committee on Tax and Revenue referring to the year as an “annus horribilis”.
The tax profession is now bracing for the impending retirement of AUSkey and Manage ABN Connections on 27 March, mandating the use of myGovID and Relationship Authorisation Manager (RAM).
The transition to myGovID has been far from smooth, with many practitioners experiencing issues from the verification of identity documents to concerns around out-of-office controls.
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