Fiscal risks — revenue

Treasury

General interest charge on Australian Taxation Office audit amendments affecting pre-2000 assessments

Towards the end of 2004-05, the Australian Taxation Office (ATO) was made aware of an error in the procedure for calculation of General Interest Charge (GIC) in respect of amended assessments relating to periods prior to 2000. The ATO’s business systems were designed to apply GIC to the total debt outstanding at the date GIC took effect, which included interest amounts incurred under the previous interest regime. In resolving a taxpayer complaint, the ATO reviewed the basis of the underlying design and concluded that GIC should not apply to the previous interest amounts. As a result, some taxpayers may have been overcharged GIC. The ATO is currently examining the affected taxpayer accounts to determine what adjustments are required in light of subsequent remission and settlement activity which may have affected the accounts.