Disputes and the Australian Taxation Office22 Jul 2019
Given the complexity of the taxation regime and the requirement for taxpayers to initially self-assess their liabilities, disputes between taxpayers and the Australian Taxation Office (ATO) will inevitably arise from time to time.
If you disagree with a decision that the ATO has made about your tax affairs, you have the right to have it reviewed. However, the ATO encourages you to first seek to clarify misunderstandings or disagreements by contacting them. If this does not resolve the issue, it may be best to seek independent, professional advice about your situation as penalties and interest may be added to unpaid tax liabilities.
The ATO expects you to pay tax debts on time even if you are disputing the debt.
ATO’s in-house facilitation service
If you are an individual taxpayer or a small business with a tax dispute another early step could be to use the ATO’s free, in-house facilitation service. An independent and impartial ATO facilitator will meet with you (or your advisor) and the relevant ATO officer to identify issues in dispute, develop and consider options and attempt to achieve a solution.
Can you object to the ATO decision?
If the dispute about your tax affairs remains unresolved, you could consider lodging an objection to the ATO decision. You can object to most decisions that the ATO makes about your tax affairs including: Australian business numbers, excise, fringe benefits tax, fuel schemes, fuel tax credits, goods and services tax (GST), income tax, luxury car tax, penalties and interest, resource rent taxes, superannuation and wine equalisation tax. Time limits for lodging objections can vary from 60 days to 4 years. If you are unsure of the time limit in regard to your situation it is best to seek timely, independent advice.
You are not able to use the objection process to dispute a general interest charge or a late penalty imposed by the ATO. However, you may ask the ATO to remit it, ie reduce or cancel the amount.
Making an objection to the ATO
You can use the ATO objection process in the following situations:
- You disagree with the way that the ATO has interpreted the law. For example, you disagree with the ATO’s amended assessment of your tax liabilities.
- You are not sure if you have interpreted the law correctly. For example, perhaps you should have included some income on your tax return, or you should have claimed some expenses.
- You want the option of requesting an external review of the decision if the ATO does not agree with your assessment.
- You are outside the time limits for amending your tax return.
How to object
An objection must be lodged in writing within the time limit. There is no fee. You can use an ATO form or write a letter. However, it is important to know what details to include in your objection. If you get assistance in preparing the objection, you can authorise your advisor to lodge the objection on your behalf. It is very important to promptly respond to any further requests for information made by the ATO.
How the ATO deals with the objection
If the objection is resolved in your favour the ATO will amend its original decision. Money owed to you will also be paid, including any interest.
Once the ATO has have made a decision about an objection it will send you or your advisor:
- a notice of an amended assessment,
- a notice of decision, including reasons for the decision,
- information about how to seek a review by a tribunal or court if you are dissatisfied with the ATO’s decision,
- information about how to pay any outstanding amount of tax.
If the ATO has not made a decision about your objection within 60 days of lodgement, you can apply for your objection to be deemed disallowed. This could allow you to seek an external review by the Federal Court of Australia (FCA), the Federal Circuit Court (FCC) or the Administrative Appeals Tribunal (AAT). It is best to seek independent specialist advice before seeking external review.
If you are dissatisfied with the decision about your objection, you can apply for an independent external review to the AAT, the FCC or the FCA for a review, depending on your circumstances and the relevant governing law. Additionally, you can approach the Inspector-General of Taxation (IGT). The IGT is an independent statutory office which can assist you or your advisor address concerns or complaints you may have in relation to administrative actions taken by the ATO.