We're changing how some income tax payments are handled to reduce unintended refunds.
Changes from 6 October
From 6 October 2026, if a return for the previous income tax year has already been filed and processed when we receive a payment for that year, we'll use the payment to clear any amount owing and automatically transfer any remaining credit to the current income tax year.
For example, if 2027 is the current income tax year and a payment is made to the 2026 income tax year after the client’s 2026 return has been processed, any amount remaining after their 2026 income tax liability has been paid will automatically be transferred to the 2027 income tax year.
What this change will not cover
This change is intended to reduce situations where a payment for a current or future provisional tax obligation is refunded due to incorrect period instructions being provided by clients. However, it will not prevent all refunds of excess payments. The automatic transfer will only occur if the return for the previous income tax year has already been processed when we receive the payment.
If the return has not been processed when the payment is received, the automatic transfer will not occur. Any resulting credit will be managed through our standard debt offset, nominated transfer or refund processes, and may be refunded once the return is processed.
Ensuring payments go to the right year
While this change will reduce unintended refunds where a payment has been directed to the wrong income tax year, the best approach is still to ask clients to direct payments to the correct tax type and period.
For example, if you want to cover both a 2026 income tax liability and a 2027 provisional tax obligation, your client should make separate payments to each period.
This change applies only to the current and previous income tax years (or ‘current year minus 1’). It does not apply to older income tax years regardless of whether there is an assessment in that period or not.
If the overpayment was made in error, or was intended for another tax type or period, you can still transfer the payment using the Financial transfers service in the Intermediary centre in myIR.