Clients have previously had GST refunds withheld by the ATO  pending the completion of verification or audit activity. This has caused significant cashflow problems to affected small business taxpayers, that often rely on the timing of the prompt receipt of the refunds. This approach by the ATO has now been put to an end, based on the case of Multiplex Pty Ltd v FCT.

In the Multiplex Case, GST refunds were withheld by the ATO pending the completion of audit activity. However, the court found they should be released immediately. The ATO appealed this decision to the High Court. However, on Friday 9th December 2011, the Commissioner of Taxation was not granted special leave to appeal.

The ATO's Deputy Commissioner James O'Halloran released a statement that 'your client's affected activity statement refunds will be released as soon as administratively possible'.

Although this will be a cause of concern for the ATO because of those individuals engaged in activity statement fraud, it poses a significant win for small business taxpayers.

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