The ATO is holding your BAS refund: why it happens and what to do

You’ve lodged your BAS, the refund is sizeable, and you’ve been counting on it. Maybe you’ve just bought a lot of equipment, fitted out new premises, or exported more than usual. The due date comes and goes, and the money doesn’t appear. Then a letter arrives: the ATO is retaining your refund while it checks.

This is more common than many owners realise, and it isn’t an accusation. It’s the ATO’s standard verification process. This guide explains how it works, what the timeframes are, what you’ll be asked for, and how to keep the business funded while it’s sorted out.

Why does the ATO retain BAS refunds?

The ATO explains that it may hold a refund for checking based on:

• The size of the refund, either in absolute terms or compared with your previous lodgements.
• Changes in your circumstances or behaviour.
• Data matching that identifies a refund as higher risk.

Its own examples include a small business claiming a large refund for the first time, and situations where the refund might be going to the bank account of another party. Legitimate businesses trigger these checks all the time, especially after a big one-off purchase.

Common triggers we see include:

Situation	Why it produces a refund
Buying expensive equipment or vehicles	Large GST credits in one period
A premises fit-out or construction	GST on building costs
Exporting	GST-free sales with GST-bearing inputs
Start-up phase	Costs ahead of sales
Buying commercial property	GST on the purchase, if it applies

How long can the ATO hold a refund?

The key timeframes, from the ATO’s page on checking refunds:

• 30 days to notify you. The ATO will tell you within 30 days of lodgement if it’s retaining your refund for verification. If it doesn’t notify you in that time, it releases the refund on day 31 (though it may still check afterwards).
• Interest after 14 days. The ATO pays Delayed Refund Interest on legitimate BAS refunds it retains for more than 14 days.
• Objection after a further 60 days. If the ATO is still retaining your refund 60 days after the 30-day period, you may object to the decision. That period is extended by however long it takes you to provide information the ATO asks for.

The 30-day notification period is relatively new. The ATO’s retention framework change extended it from 14 to 30 days from 1 July 2025, to give the ATO more time to review suspected fraudulent refunds. For legitimate businesses, the practical effect is that a refund you might once have seen quickly can now take longer.

What will the ATO ask for?

The ATO says it may ask for the records you used to prepare your BAS. Depending on your circumstances, that can include:

• Tax invoices for the purchases behind the credits.
• Accounts transaction listings.
• Bank statements and proof of payment.
• Details of your business activities.
• Confirmation from suppliers.

The fastest way through verification is to have these ready before you lodge a large refund, not after the ATO asks. A short cover note from your tax agent explaining the reason for an unusual refund, for example “purchase of CNC machine, invoice attached”, can make a real difference.

What reduces the refund you receive?

Even once the check is complete, the amount paid can be less than your BAS showed:

• Offsetting. The ATO generally uses credits to pay debts on your other tax accounts, including some debts that were on hold, and notifies you when it does. Exceptions include amounts not yet payable and debts under a compliant payment arrangement. The ATO’s offsetting page has the details.
• Adjustments the ATO makes after reviewing your records.
• Bank details. Refunds for businesses with an ABN are paid to a nominated Australian account held in the business’s name or by a registered tax agent. Incorrect details delay payment.

If you’re counting on the refund for something specific, check your other ATO accounts first.

How do you keep cash flow steady while the ATO checks?

A delayed refund is a timing problem, and timing problems have a few standard fixes:

1. Talk to suppliers early about extended terms, especially the supplier whose invoice created the refund.
2. Prioritise payments that carry penalties or affect staff: wages, super, rent.
3. Ask your tax agent whether any other lodgements or payments can be rescheduled.
4. Use a short-term facility, with the refund as the exit.

If you’re weighing up a facility while the ATO completes its check, you can find out what’s possible without a credit check at the enquiry stage.

Can a BAS refund be the exit for a bridging loan?

Yes, if it’s well documented. A lender will want:

• The lodged BAS and the refund amount.
• The ATO’s notice of retention, and any requests it has made.
• Evidence of the transactions behind the refund.
• Your tax agent’s view of timing and whether anything will be offset.
• Security, or for smaller amounts, the business’s trading history.

For a smaller gap and a business with solid bank statements, an unsecured cash-flow bridge, typically $5k to $500k, may fit. For larger amounts, or where the refund is part of a bigger plan, property-secured bridging from $20k to $5m gives more room. Our page on bridging against money you’re owed explains how lenders assess refunds and other receivables.

An illustrative example

A family-owned brewery installs a new canning line and lodges a quarterly BAS showing a GST refund of about $140k, far larger than usual. Three weeks later, the ATO notifies it that the refund is being retained for verification and requests invoices, proof of payment and bank statements.

The brewery’s tax agent sends everything within four days. Meanwhile, the brewery needs to pay for aluminium cans and malt ahead of summer. It takes a short unsecured facility sized on its turnover, with the refund as the source of repayment. The ATO completes its check a few weeks later, pays the refund plus delayed refund interest, and the brewery clears the facility early. (Illustrative scenario.)

What should you do before lodging a big refund?

• Gather invoices and proof of payment for the large purchases in the period.
• Check your ABN and bank details are current with the ATO.
• Clear or arrange any debts on other tax accounts so the refund isn’t offset unexpectedly.
• Ask your tax agent whether a brief explanation should accompany the lodgement.
• Plan cash flow as if the refund will take longer than usual, and have a fallback ready.

If you also claim the R&D Tax Incentive, our guide to the R&D refund timeline covers a different, longer process with its own waiting points.

What if you disagree with the outcome?

If the ATO finishes its check and adjusts or reduces the refund, ask for the reasons in writing and go through them with your tax agent. Often the difference comes down to a missing invoice or a transaction that needs better evidence, and supplying it resolves the issue. If you still disagree, the ATO has formal review and objection processes, and your tax agent can advise on whether it’s worth pursuing and how long it may take.

While that’s happening, treat the disputed part of the refund as uncertain in your cash flow plan. Plan around the amount the ATO has accepted, and treat anything further as a bonus if it arrives. The same applies if you’re using the refund as the exit for a bridge: the lender will count the accepted amount, not the amount in dispute, so it’s better to size any facility on that basis from the outset.

Don’t let a refund check stall the business

A retained refund usually means the money is coming, just not yet. If the timing is causing a problem, tell us about it. The enquiry takes about 60 seconds, there’s no credit check when you first enquire, and your details stay with one team rather than being passed along to a pile of lenders. A real person reviews it and calls you.

Please include the refund amount, the date you lodged, what the ATO has asked for and any tax debts you know about. Accurate details help us work out the right option first time.

See if you can bridge your refund →