A5.1 All Business Activity Statements, including those involving GST refunds, are initially received by the Tax Office either in paper form or electronically.
A5.2 The Tax Office has advised that, for the 2003-04 year, there were 1.89 million BAS refunds processed, of which 1.28 million were paper lodgments and 0.61 million were electronic lodgments.96
A5.3 Where a BAS is lodged in paper form, the data on the BAS must be converted into electronic form for processing and recording on the Tax Office's information technology systems.
A5.4 The data capture process consists of the following steps:
- scanning/imaging; and
- key entry and editing.
A5.5 Pre-processing involves receiving and opening the activity statements, separating out other correspondence and cheques and checking that the statements are suitable for scanning.
A5.6 Scanning involves converting handwritten information contained on the BAS into an electronic form that is suitable for processing.
A5.7 The key entry process involves Tax Office staff manually inputting data from activity statements which cannot be scanned into the Tax Office's electronic systems.
A5.8 The key edit process involves Tax Office staff looking at all scanned activity statements where the computer/scanner is uncertain what the numbers should have been. Key edit staff then will, if possible, make any necessary corrections to the data.
A5.9 Electronic lodgments are made through the Tax Office's electronic lodgment service for tax agents, via an electronic commerce interface or through business and tax agent portals.
A5.10 During the lodgment process a number of 'data quality edits' are performed. These edits ensure, for example, that data which should be alphabetical is not numerical and that decimal places have not been included.
Integrated processing system
A5.11 After the data from a BAS has been converted into an electronic format via the processes discussed above, the BAS is then processed on the Tax Office's Instalments Processing System (IPS).
A5.12 IPS runs a number of tests to ensure that the data captured electronically at the previous stage is in fact accurate. The majority of activity statements pass through these tests and continue on through the normal processing systems.
A5.13 Where the system detects an issue with the refund, IPS will create 'data exceptions' which are then reviewed and corrected by the Tax Office's 'Activity Statement Exception' (ASE) teams.
Processes applied after Activity Statement Exception work is completed
A5.14 Once any data exceptions have been checked by the Activity Statement Exceptions area, and where necessary corrected, the statement is then released back into IPS for further processing and review by the risk rating engine.
A5.15 The RRE will halt any refund cases where the Tax Office is currently undertaking compliance activity on the taxpayer concerned. It will also halt any refunds which meet certain inbuilt risk profile and risk parameters for every taxpayer.97
A5.16 BAS refund cases that are halted by the RRE, and which involve current Tax Office compliance activity, will generally be referred to the Tax Office staff member who is undertaking the current compliance activities.
A5.17 BAS refund cases that are halted by the RRE because of risk parameters will be sent to one of the verification areas within the Tax Office.
A5.18 The refunder process is the term which the Tax Office uses to describe the process which is applied to GST refund cases which have passed the RRE, or which have been cleared for payment after having been verified by one of the Tax Office's compliance areas.98
A5.19 During this process various Tax Office systems operate to identify if any conditions or indicators are present to prevent the refund from issuing. These conditions include missing bank account details, overdue activity statements or the presence of an intercept or indicator on the taxpayer's account. It is also at this stage that any outstanding debts are identified and an offset may occur.
A5.20 If the refund passes the final checking process it is paid to the taxpayer's bank account or via a cheque.
A5.21 The following flow chart, prepared by the Tax Office, summarises all the processes within the Tax Office that may be applied to a GST refund.
Figure 1: Tax Office Activity Statement refund processes:
96 ATO Minute No IGT-GST16-2004 at paragraph 3.2 on pp. 3-4.
97 ATO Minute No 1 at paragraph 2.3.1.
98 ATO Minute No 2 at paragraphs 4.9.1 and 5.8.