We have recently had a situation where for the third year in a row, our client's tax refund was taking well over four weeks to come through. This year we followed it up to see what happened. This is what we learned.

It's not uncommon for individuals who have gone through personal bankruptcy to experience delays in receiving their tax refunds. Several factors can contribute to these delays.

1. Ongoing Financial Review: Following insolvency, the Australian Tax Office (ATO) will flag your return for manual review each time the outcome is a credit. This means additional time for processing is required.
2. Offset Against Original Debt: The ATO will review your tax outcome to see if the credited amount can be used to offset the original debt. This is a manual process and requires additional processing time.
3. Outstanding Debts: If you have any outstanding debts, including tax debts, these may need to be settled before your refund is released. They can use your refund to offset these debts, causing delays.

Q: How long should I expect to wait for my tax refund after bankruptcy? The ATO have advised that situations such as these will require additional processing time. Their target processing time is 30 business days, which is the equivalent of 6 weeks. If this time has lapsed and your tax return has still not been completed, please let us know as we can contact the ATO to check why the return is taking longer than expected. If there is any additional information required, we can provide this to them.

Receiving your tax refund after personal bankruptcy can be a frustrating and time-consuming process. Unfortunately, the ATO will flag your returns for manual review each year, so patience is required to allow the process to run its course.

If you have any concerns, please get in touch with us as we can always follow up with the ATO on your behalf.