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  • We are paying interest on early payments automatically from March 2022

    From March 2022, we are automatically identifying, calculating, and paying your clients’ interest on early payments (IEP) directly into their nominated bank account. This process applies to eligible early payments made from 1 July 2021.

    For eligible payments made:

    • after 13 March 2022, we are paying IEP entitlements generally within two weeks of the due date of the liability
    • between 1 July 2021 and 13 March 2022, we are paying IEP entitlements from 14 March 2022.

    If your client has nominated their personal bank account for the payment of ATO refunds:

    • their IEP entitlement will be paid directly into their nominated bank account
    • you should ensure their financial institution details are up to date in Online services for agents.

    If your client has nominated your trust account for the payment of ATO refunds:

    • their IEP entitlement will be paid into your trust account
    • you can access an EFT Reconciliation Report to view any IEP entitlements paid to your trust account on behalf of your client.

    If your client has an existing tax debt, their IEP entitlement will be offset against the debt and any excess IEP amount will be paid to their nominated bank account.

    Your client will receive a statement of account which you can access in Online services for agents under Communication history.

    Interest on early payments is assessable income and needs to be included in your client's tax return in either the:

    • income year your client receives the interest
    • income year it is offset against your client's tax debt.

    For individual clients, IEP amounts will be prefilled in their income tax returns and shown in the Income Tax Prefill Reports.

    For more information, visit ato.gov.au/interestonearlypayments

    Last modified: 21 Mar 2022QC 68174