ATO: Don't blame IT for tax return delays

The Australian Taxation Office (ATO) has failed to meet its 14-day processing target for almost one in four individual tax returns lodged online.

But delays were due to the ATO having to "smooth out" its processes rather than any significant technical errors stemming from recently implemented IT, it claimed today.

"We apologise if you have not received your refund within our service standards, however there are no significant technical errors with the system causing delays," the agency announced.

"It is a brand new system and we are still smoothing out some of our processes."

The ATO reported having received 4.7 million tax returns so far. 3.8 million of those had been finalised, including 3.6 million refunds worth more than $9 billion.

One million refunds were said to have been issued in the past week. A further 290,000 refunds worth almost $800 million were expected to be issued by 24 August.

The ATO has faced a storm of criticism over its Change Program, which generated data integrity concerns that delayed more than 200,000 tax returns in March.

Returns submitted this financial year were also delayed, with Australians with government student loans reporting longer than usual waits last month.

"Up to 23 July, there were delays with the processing of returns for taxpayers who have Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) obligations," the tax office reported.

"We needed to carry out extended testing of the accuracy of assessments for these returns.

"Processing of these returns commenced on 23 July 2010 - therefore, if you a filed a return before 23 July 2010 and you had a HELP or SFSS obligation, your assessment would take longer to complete."

As in previous years, the ATO aimed to process 94 percent of individuals' electronic tax returns within 14 days, and 80 percent of paper returns within 42 days.

Since 1 July, it has processed only 77 percent of electronic returns within 14 days, and 95 percent of paper returns within 42 days.

Some delays were caused by taxpayers making errors in their tax returns. According to the ATO, more than 6,000 assessments had been delayed by incorrect bank details.

Other common errors included: failure to include a date of birth; failure to report a name change from previous years; and failure to include income such as interest from a bank account or pay from a previous job.

Tasmanian Liberal Senator Guy Barnett criticised the Federal Government this week for "causing havoc" with the ATO IT upgrade.

"Hundreds and possibly thousands of hard working Tasmanians are missing out on their tax refunds because of tax office bungles," he said.

"This bureaucratic bungle is not only impacting the lives of thousands of ordinary Australian tax-payers but is also affecting the small business community, particularly smaller accounting firms who often do not get paid until their clients receive their tax return."