1.1 This is the report on the review conducted by the Inspector-General of Taxation (Inspector-General) of the administration of refunds of goods and services tax (GST) by the Australian Taxation Office (Tax Office) arising from the lodgment of Business Activity Statements (BASs). This report is made under section 10 of the Inspector-General of Taxation Act 2003 (IGT Act).

1.2 The review was announced on 30 January 2004. Its terms of reference were announced on 31 March 2004 and are reproduced at Appendix 1 to this report. Details of how the review was conducted are given at Appendix 2.

1.3 The review was conducted pursuant to section 8(1) of the IGT Act, being a review conducted on the initiative of the Inspector-General. The decision to undertake the review was prompted by concerns raised with the Inspector-General by industry and tax practitioners.

1.4 A number of key findings were identified by the review. These and associated key recommendations are listed in Chapter 2. All other findings and recommendations are discussed in Chapters 4 to 7 under each of the four specific terms of reference. Chapter 3 contains a description of how GST refunds arise.

1.5 During the course of the Inspector-General's review, the Tax Office made or proposed a number of changes to its systems involved with the administration of GST refunds. Some of those changes directly addressed concerns raised with the Inspector-General. All changes made or proposed by the Tax Office are noted in this report wherever relevant.

1.6 The Commissioner of Taxation's response to the review is in Appendix 3. The Commissioner's detailed comments on each recommendation discussed in Chapters 4 to 7 of the report are set out immediately below each recommendation.

1.7 The assistance and co-operation provided by the Commissioner of Taxation and his officers to the Inspector-General and his team during the course of the review are gratefully acknowledged.