26 September 2023

Audit finds risks in GST refunds

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An audit of a refund scheme for tourists leaving Australia to claim back their GST payments on purchases while here has found the Agencies responsible for it asleep at the wheel.

In his report, Management of the Tourist Refund Scheme (TRS), Auditor-General, Grant Hehir said the Department of Home Affairs and the Australian Taxation Office (ATO), were “partly effective” in their joint administration of the TRS and “procedural guidance and performance information could be improved”.

“Home Affairs and the ATO have determined that TRS compliance is a low priority compared with their other responsibilities,” Mr Hehir said.

“They have done so in the context of an inappropriate risk assessment process.”

He said there was evidence of a “large level of non-compliance” and “significant revenue leakage” from the scheme which he calculated to be between $244.3 million and $556.6 million over its life.

“Although the entities have developed data analysis tools to review claims, the tools have not been embedded in business processes,” he said.

“Home Affairs and the ATO have not undertaken appropriate risk assessments.”

He found the Agencies had not developed a joint risk assessment of the TRS; not provided a full risk assessment and annual update of risks as required under the Memorandum of Understanding between them; and not fully implemented the additional risk mitigations it identified in its 2018 risk assessment.

The audit recommended that ATO and Home Affairs improve risk management of the TRS by preparing a joint risk assessment which identifies all risks and appropriate treatments and then review the assessment annually.

It also recommended that Home Affairs, the ATO and the Treasury jointly develop a methodology for estimating the non-compliance and revenue leakage.

The recommendations were agreed by the Agencies.

The Auditor-General’s online report can be accessed at this PS News link and his 64-page printed report can be accessed at this link.

The audit team was Julian Mallett, Andrew Gavin, Fei Gao, Lachlan Fraser, Gabrielle Davy and David Brunoro.

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