Are You Currently the Subject of a Tax Office Inquiry?

Are You Currently the Subject of a Tax Office Inquiry?

  • September/28/2023

Suppose you’ve been informed that the Australian Taxation Office (ATO) is looking into, evaluating, or auditing your tax affairs. In that case, you might be figuring out what to do next or how to respond successfully. The following article seeks to offer advice on how to handle such situations.

Central Recommendation:

Respond promptly when you get the initial letter informing you that you’re being reviewed or audited by supplying the needed papers immediately. Instead, think about how you might respond carefully. The initial letter may also offer an 80% penalty reduction for voluntary disclosure, making this even more crucial.

In-Depth Approach:

So, how should you respond to the ATO’s initial letter, and what should you do next?

  • Understanding the Concerns of the ATO:

Take the time to learn about the specific issues the ATO investigates. Normally, the ATO conducts investigations out of genuine concerns regarding your tax situation. This comprehension will direct your actions in the subsequent stages.

  • Analyzing the Validity of the ATO’s Concerns:

Evaluate the credibility of the ATO’s concerns. A voluntary disclosure may be the best course of action if you have discovered errors in your tax affairs. This path allows you to promptly resolve the issue, pay any outstanding taxes, and proceed.

  •  Creating an Effective Response:

If you believe that the ATO’s concerns are unfounded, you should concentrate on convincing them of your position. Before submitting the requested documents, thoroughly examine their contents. Some details may inadvertently convey a false impression, whereas others may provide crucial context. Ensure that you emphasize these points with the ATO.

  • Consider Additional Information:

Consider whether you have additional documents or explanations beyond those requested by the ATO. Your knowledge of your business or industry can assist you in supplying context that the ATO may need to be aware of.

  • Effective Communication:

Use precise and simple language when communicating with the ATO. This enhances the probability of effective interaction and comprehension.

  • Response Evaluation:

After you submit your response, the ATO may contact you with additional queries or requests for additional information. Maintain the strategy of addressing issues in a thorough and well-explained manner.

  • ATO’s Decision:

The ATO will either conclude the investigation generally based on the response you gave or escalate the situation. If escalation occurs, it might progress from a review to an audit phase.

  •  Stage: Position paper :

The ATO will publish a position paper during the audit phase describing its initial findings. Consider this article’s information, then write a thorough answer addressing each issue.

  • Favorable Resolution:

If you respond constructively, the ATO might accept your justifications and reach a favorable conclusion. If not, the ATO may evaluate your situation and assess penalties against you.

  •  Lodging an Objection:

You can object to the ATO’s assessment if you disagree with it. This provides yet another opportunity to present your case comprehensively.

  • Legal Proceedings:

If necessary, you could pursue legal action in either the Administrative Appeals Tribunal (AAT) or the Federal Court. This can be expensive, so it is best to avoid reaching this stage whenever possible.

  • Considering Negotiation:

You can initiate settlement discussions with the ATO at any time. However, settlements are more probable if your case has merit and can be legally defended.

Remember that every investigation is different; these stages provide a general framework for navigating an ATO investigation. Consultation with a tax expert skilled like Excelsior Tax Advisory in such matters can provide tailored advice specific to your situation and increase the likelihood of a successful resolution.


Level 2, 215-219 George Street Liverpool NSW 2170

Send Email
[email protected]
Have any question?
0400 363 425

Copyrights 2023 Excelsior Tax Advisory. All Rights Reserved.