Ingram Micro is stuffing hundreds of reseller stockings with a one-off tax refund that nearly went undiscovered by the distributor.
It was "identified to Ingram" in May, said managing director Steve Rust, that the distributor could apply for a refund on overpaid sales tax on certain computer equipment and components containing AC/DC adapters, instruction material and software sold during the period of May 1, 1998, to June 30, 2000.
The overpaid tax would then, by law, have to be passed on to the consumer, or in Ingram's case on to its resellers.
Rust said "hundreds" of its resellers were entitled to a credit note entitling them to anywhere from "a couple of hundred dollars to thousands". While Ingram is not divulging the total figure of refund entitlements, the figure could be very substantial considering the number of resellers Ingram has and the average refund being greater than $200.
The refund appeal took six months of administration work in regular negotiation with the Australian Taxation Office, said Rust. Ingram also contracted a third-party tax consultancy to assist in the process.
For its trouble, Ingram is charging resellers an "administration fee" of up to 50 per cent of their entitled refund.
"There were enormous administration constraints," said Rust. "We saw an opportunity to legally and legitimately pass on the refunds to resellers.
"We're just recouping sales tax that has already been paid."
However, one reseller in contact with ARN said Tech Pacific sent a similar credit note notifying resellers of a sales tax refund for products purchased during that period and that it would only charge a 15 per cent administration fee.
Anne Mossman, marketing manager for Tech Pacific, said the distributor has conducted the refund process twice in the past, most recently a couple of months ago. Although Mossman was unable to confirm how much an administration fee it charged, it would not have been as much as 50 per cent.
"Wherever there's an opportunity to pass money onto resellers, we do it," she said.
John McCarthy, assistant commissioner for the ATO, said that while there is no rule governing how much wholesalers charge customers to administer the refund, the expected norm was between 20-30 per cent of the total refund.
"The question of administration fees has been a vexed issue for many years and that's why [all] the ATO demands is confirmation that the refund is being passed back to the consumer," he said.
Resellers have one of two choices, according to McCarthy: accept the credit note and not look a gift horse in the mouth, or refuse to accept the refund and dispute the administration fee with the wholesaler.