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7.19 Overpaid Tax
7.19.1'Overpaid tax' may occur when an overpayment of income support payment occurs. As income (i.e. income support payment) has been reduced, the pensioner may have paid too much tax and may be eligible for a re-assessment of tax liability. However, the Australian Taxation Office (ATO) can only retrospectively review tax liability up to a period of four (4) years. This can result in a situation where a pensioner is liable to repay overpaid income support payment, and because the overpaid period falls outside the 4 year rule, is unable to apply to ATO for a refund even though their actual income has reduced for that period.
7.19.2 — DVA pensioners are advised in the first debt notification letter (with tax over 4 years) that the ATO cannot reimburse 'overpaid tax' for financial years that go back more than four years. This letter advises the pensioner that the Department will give consideration to the waiver of an amount equivalent to the overpaid tax amount which is not recoverable from ATO for those financial years. The pensioner is asked to contact the delegate if they paid tax in the financial years during which their pension was overpaid. Pensioners are instructed to ask the ATO to refund the overpaid tax for the more recent financial years.
- Discounted Debts - for the purposes of tax liability, 'discounted' debts will be deemed to have been repaid in full – i.e. amended tax statements will be provided for the total amount of debt.