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Voluntary payments

Last updated 1 November 2021

Making an early payment

We use the term 'voluntary payment' to describe situations where you make a payment to us in anticipation of a tax debt that you will owe in the future. Generally, we will not refund this amount to you unless you ask.

Example: Payment in anticipation of tax debt

Julie makes a payment in anticipation of her income tax liability before the required lodgment date of her annual tax return. This payment will temporarily place Julie's income tax account into credit.

Julie finds she needs that money, so she asks the ATO to refund it. As her income tax liability has not become due for payment, and she doesn't have any other tax debts, we decide to refund the voluntary payment.

End of example

Income tax refund and activity statement debt

If you have an income tax refund and an activity statement debt, we may offset it if events occur in the following order:

  • we process your activity statement and you have a debt
  • we process your tax return and you are due for a refund
  • we have not yet received your payment for the activity statement debt.

Example: Offset and voluntary payment

Barry lodges his fourth quarter business activity statement. It is processed on 7 July and results in a tax debt on Barry's activity statement account for $2,500. This amount is not due to be paid until 28 July.

Barry then lodges his tax return expecting a refund of $1,000. When we process Barry's return on 24 July, we record a credit of $1,000 on Barry's income tax account and issue a notice of assessment to him.

As Barry has not paid his activity statement account debit by 24 July, we offset Barry's income tax credit of $1,000 against the $2,500 debt on his activity statement account, even though his activity statement debt is not yet due for payment.

The income tax notice of assessment provides details of this offset. This means Barry will not receive the $1,000 income tax refund he was expecting.

While waiting for his income tax refund, Barry sends a payment of $2,500 on 25 July to pay his activity statement debt. However, Barry's activity statement debt has already been reduced by $1,000 after we offset his income tax refund against the debt. The payment of $2,500 will place his activity statement account into credit for $1,000. Given Barry paid the amount to us, we consider it to be a voluntary payment in anticipation of a future liability and will not automatically refund it. Generally, we will keep this amount as a credit on Barry's activity statement account unless he asks for it to be returned.

End of example

Small credit balances

We may refund small credit balances, including some voluntary payments, when we undertake bulk account maintenance to clean up our accounts.

Find out about:  

See also:  

  • PS LA 2011/22 Refunds of running balance account surpluses and credits - Commissioner's discretion to retain refunds and the discretion to pay refunds in a different way
  • Taxation Administration Act 1953 Part IIB - Running balance accounts, application of payments and credits, and related matters (section 8AAZL)
  • Taxation Administration Act 1953 Part IIB - Running balance accounts, application of payments and credits, and related matters (section 8AAZLF)