Tax Return Amendments In Australia
If you’ve made a mistake in your tax return, or if the Tax Office has made a mistake, or if you disagree with a Tax Office decision or assessment, then provided you are within the time limits, you can request an amendment.
The time limits are generally 2 years for individuals and 4 years for others, but the devil is in the detail (see more below).
The Australian Tax Office can also independently make amendments to your assessment based on information they receive or discover, such as through their various data-matching programs, or perhaps a recent eposide of Four Corners.
If there’s evidence of fraud or tax evasion, the Tax Office have no time limit to issuing an assessment of tax owing.
Time Limits on Amended Assessments (Summary)
|Small Business Entities
|All other taxpayers generally
|Indirect Taxes (GST, WET, LCT and Fuel Tax) generally
|Tax Office – when there’s evidence of fraud or evasion
|no time limit
2 Year Amendment Period:
- Individuals (apart from the exceptions noted below)
- Small Business Entities
4 Year Amendment Period:
- Individuals receiving distributions from non-small business entity trusts and partnerships (other than public trading trusts and corporate unit trusts)
- Taxpayers associated with tax schemes and other special cases
- Individual’s superannuation excess contributions tax assessment
- Small Business Entities requiring adjustments under CGT earnout rules
- All other taxpayers
- Indirect taxes (GST, WET, LCT and Fuel Tax) have their own rules – about which see here. The rules provide for a 4-year amendment period.
Review periods for most matters run from the date (or deemed date) a notice of assessment is issued.
In the case of fraud or tax evasion, or to give effect to objection, appeal or review decisions, there is no time limit on the Tax Office issuing an amended assessment to increase a taxpayer’s liability.
In other cases, the Tax Office is subject to a two or four year limit on amendments which increase the tax liability. The time limits can be extended with Federal Court approval if further time is needed for an investigation.
Small businesses automatic penalty relief – once in 3 years
Available for small businesses and some other entities – a penalty will not be applied to tax returns and activity statements for an inadvertent error. The relief cannot be applied for; it will be automatically granted by the Australian Tax Office no more than once every 3 years.
See penalty relief.
Commissioner’s remedial power to modify operation of the law
The Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 was passed parliament on 9 February 2017.
The measures provide that the Commisioner of Taxation has a limited ‘remedial’ power to carry out the law in a way which is favorable to the taxpayer(s) (or leave the taxpayer no worse off), when it has been determined that the impact on the Commonwealth budget would be negligible, and only as a last resort.
The power is meant to give effect to an intended purpose of the tax law which might otherwise require a change in the law to achieve.
Before exercising the power, the Commissioner must be satisfied that any appropriate and reasonably practicable consultation has been undertaken, consistent with section 17 of the Legislation Act 2003. The Tax Office has stated that the Commissioner “will consult publicly prior to the making of any legislative instrument.”
The Tax Office has published an information page regarding the exercise of the new powers and an online form for taxpayers to use to initiate a process as well as a listing of situations where the remedial power has and has not been applied.
How To Make An Amendment To A Tax Return
To take up a dispute, there are a number of ways to proceed:
- Simple matters, such as a clerical error or oversight, can be dealt with by way of a written request for amendment, except for SMSF super funds, for which any amendment requires the annual return to be re-submitted in full.
- In simple matters the ATO may provide a contact telephone number in the amended assessment, which can be used to question the matter without having to identify the issues with legal precision or research.
- For individuals and small businesses The Tax Office now provides an In-house facilitation service which is an can be used expedite the management of tax or super disputes without the need for formal processes objection. The process is free, not compulsory, and does not affect taxpayer’s rights of review, for which the time limits should still be kept in mind. Further details of this service can be reviewed here.
- More complicated matters involving tax assessments, administrative penalties, Private Rulings and reviewable GST decisions are usually dealt with by way of objection.
- Electronic options for requesting an amendment are progressively being made available on-line. Unassisted individuals can use the myGov account portal, other entities via the business or tax agents’ portals.
For a summary of amendment request methods with links to forms for all entities see Fix a mistake or amend a return.
Except for matters of fraud or tax evasion, there are time limits within which amendments can be made, or an objection considered (see more on this below).
The financial penalties which apply to tax misstatements, omissions or errors are designed to reward early and voluntary disclosure, with a combination of administrative penalties and interest applying to underpaid tax.
The Tax Office can also launch a prosecution for offences for which there are court-imposed fines, and in some matters, imprisonment. In practice, prosecution action is reserved for the more serious or willful cases.
Within limitations, amended assessments and penalties can also be the subject of a request for review or objection.
How To Lodge An Objection To An Assessment
Lodging an objection to an assessment is a more formal method of obtaining a review. Adverse decisions on an objection can be appealed by the taxpayer, and there are rules for the legal qualification and management of a dispute through higher levels, including the court system.
The important distinction between an “objection” and an amendment request, is that a legal objection preserves your rights to take the matter further, if a decision is not favorable to you. This should be considered in the light of the relative importance, or economic value of the issues in dispute.
A valid objection must be in writing, explicitly “objecting”, or stated to be an objection, and be lodged within the time allowed. It must identify the disputed matter with sufficient precision, and the year and any reference number, such as a notice of assessment.
Without court or tribunal consent, your case is limited to the grounds stated in the objection; so care should be taken to include all the possible grounds.
Forms – Objection Forms
Whilst there is no prescribed format for an objection, the ATO provides downloadable forms to help ensure that the matter you are disputing is securely raised, and that the expected documentary evidence is included.
- Form of objection (for general use) is here (Nat 13471): Objection form – for taxpayers
- Form of objection for use by tax agents is here (Nat 13044): Objection form – for tax professionals
There is no lodgement fee for a notice of objection.
Objection Time Limits
The objection time limits are those periods in which a valid amended assessment may be made, which are summarised here: See Decisions you can object to and time limits
That includes amendments to amended assessments, with some limitations. Objections to amended assessments are confined to the later of the original assessment objection period, or 60 days after the amended assessment.
Late objections may be considered on request, at the ATO’s discretion, for which there are guidelines documented in ATO Practice Statement PS LA 2003/7.
Acceptable excuses may include:
- the taxpayer was too ill to lodge an objection
the taxpayer was overseas, did not return until the time limit had expired and it is shown that, in all the circumstances, those matters prevented the taxpayer from lodging an objection within time
- the taxpayer did not know about and did not receive the taxation decision because it was sent to the wrong address, or there were problems with the mail service
- the taxpayer thought that lodging an objection was futile until a court decision – or a change in legislation or a public ruling – delivered shortly after the time limit expired made the objection reasonable
- the taxpayer thought that lodging an objection was futile but then discovered they may have believed this because the ATO gave them incorrect information
- the issue involves an important question of law or practice
- the taxpayer has a strong case and has previously advised us before the time limit expired that they did not accept the decision and would be lodging an objection
- the taxpayer has a strong case for allowing the objection, and had requested an extension within a period for which there is a reasonable explanation for the delay
- the delay in lodging an objection in time was caused by the ATO’s conduct
- the taxpayer’s adviser, despite receiving prompt instructions, was negligent and failed to execute those instructions
- an individual or small business with a 2-year time limit has lodged, within 4 years, an objection that discloses an arguable case for the objection to be allowed in full or in part.
Information requirements for an Application to extend the time to lodge an objection are here: Application for extension of time to lodge an objection.
Time Taken For a Decision On An Objection
If the ATO has not made a decision within 60 days you can write and request that they do so. Generally, if decision hasn’t been made within a further 60 days, the objection is deemed to be disallowed.
Objections may be lodged against reviewable decisions, commonly including tax assessments, administrative penalties, private rulings, and reviewable indirect tax decisions (such as GST).
The ATO provides detailed guidance for obtaining reviews and lodging objections here.
Managing taxation disputes is not an easy D.I.Y. area, because the tax law is very complex, and often what seems simple, isn’t. The requirements for legal validity at various stages of a review process can be exacting, and failure to observe the details can result in lost opportunities to save tax or penalties.
If a significant amount of money is at stake, professional guidance is a wise investment. It is important that your accountant has experience in tax disputes and the negotiation of claims and settlements with the ATO, not just tax return preparation.
See useful commentary on the management of tax disputes from Holding Redlich, tax litigation lawyers:
- Tax disputes: When to settle and when to litigate a tax matter (Part 1)
- Tax disputes: Comments on settling a tax matter (Part 2)
Assistance for small business in resolving disputes
The government has announced measures to assist small business by holding the costs down and providing a faster process to resolve disputes.
From 1 March 2019 a Small Business Concierge Service within the Australian Small Business and Family Enterprise Ombudsman’s office provides support and advice about the Administrative Appeals Tribunal process. See Australian Small Business and Family Enterprise Ombudsman.
The measures provide small businesses with access to advice and legal support in disputes coming before the AAT. See also Tax Return Amendments.
Dispute Resolution Instruction Bulletin DR IB 2019/1 sets out internal Tax Office policy and principles on conducting litigation in the Small Business Taxation Division of the Administrative Appeals Tribunal (AAT).
- MT 2024/D1 Miscellaneous tax: time limits for claiming an input tax or fuel tax credit
- Object to an ATO decision
- Taxation Ruling TR 2011/5 – Income tax: objections against income tax assessments
- Getting tax return copies and other information
- Tax Office – new limited ‘remedial power‘
- For checking progress of an amendment or a tax return – see ATO contacts here
Other Avenues of Taxation Review
- Early enagement for advice (including complex issue resolution for individuals)
- Complaints – Information about lodging a complaint is provided here.
- Appeals from decisions on objection will go to the tribunals and/or through the court system depending on the matter and nature of dispute.
- The Tax Ombudsman deals with complaints concerning Public Interest Disclosures issues relating to the ATO or the Tax Practitioner’s Board. The tax complaint handling role was transferred to the Inspector-General of Taxation from 1 May 2015.
Decisions you can object to and time limits – Australian Tax Office
This page was last modified 2021-10-14