Navigating Income Tax Disputes with the ATO

Every year more than 2 million Australians are contacted by the ATO in regards to their income tax returns. While not all of these cases result in audits, it’s plenty of work to keep tax lawyers Brisbane on their toes. If the ATO contacts you then there’s no need to panic. While Australia’s tax law can be complex, help is available, and the ATO provides a formal dispute resolution system that allows you to challenge unfair decisions.

The only challenge is that tax disputes require an in-depth understanding of your finances and the law. That is beyond most of us as individuals, which is why we turn to our accountants and lawyers for support. If you’ve been contacted by the ATO then this article is for you. We’re going to explore tax disputes in more detail, as well as some of the things you can do to avoid drawing their attention.

Disputing ATO Decisions

All Australian individuals and businesses have a right to dispute decisions made by the ATO. For instance, if the ATO audits you and determines that you owe money for a particular financial year, you could dispute the decision. Lodging a dispute allows you to explore the issue in more detail, and you may be able to reach a more favourable outcome.

Most ATO decisions can be disputed. Depending on the matter at hand, you have anywhere between 60 days and 4 years to lodge your dispute. You can lodge a dispute against decisions regarding the following:

  • Australian Business Numbers
  • Fringe Benefits Tax
  • Fuel schemes
  • Goods and Services Tax
  • Income tax
  • Luxury Car Tax
  • Penalties and interest
  • Superannuation

After you lodge a dispute, you will be given a chance to sit down with a representative of the ATO and argue your case. You will need to present evidence showing why the ATO’s decision is in error. For simple matters, this can be done through the ATO’s in-house dispute resolution system. For more complex issues, you’ll need to retain representation from a tax lawyer and/or accountant to help argue your case.

Tips for Avoiding an ATO Audit

The ATO has never been better equipped to assess and audit income tax returns. The ATO now uses data collected from all over the country to automatically process and assess your tax liabilities. That allows them to identify discrepancies without the need for a manual audit. Where discrepancies are found, the ATO will contact you to discuss the matter further. If the issue can’t be resolved by amending your tax information, the ATO may progress to a full audit of your financial situation.

An audit can be stressful, costly and time-consuming. It’s best to avoid being audited wherever possible. You can do that by:

  • Lodging your tax returns on time – The nail that stands out gets hammered. In the case of taxation, that means consistently late tax returns may draw the attention of the ATO. Plus, rushing to submit your tax returns at the last minute may cause you to make mistakes, which can attract an audit.
  • Working with a professional – Taxation law is more complex than ever, so working with an accountant is the best way to avoid unwanted ATO attention. An accountant can help you get your finances in order, keep records and verify that your deductions are legitimate. Some accountants also provide audit protection that can save you from the expense of being audited.
  • Double checking your calculations – If you need to make any calculations (such as for Capital Gains Tax or depreciation), you should double check your figures prior to submitting your return.
  • Only claim viable deductions – The ATO looks very hard at the deductions you claim. While it might be tempting to inflate your deductions and increase your tax return, it’s important to only claim the deductions to which you are entitled. This decreases ATO scrutiny and it ensures you will be given a chance to fix honest mistakes if the ATO does audit you.

How to Lodge Your Tax Dispute

Tax disputes can be lodged with the ATO in multiple ways. If you are an individual, sole trader or business owner, you can use the ATO’s online portal to lodge an application. Alternatively, you can lodge a dispute through the mail.

While you can handle this yourself, the best way to lodge an ATO dispute is through your tax lawyer Brisbane. A professional tax lawyer can be authorised to work on your behalf, and their support is invaluable in resolving taxation issues in your favour. It’s always a good idea to speak to a tax lawyer before lodging your dispute. They will be able to assess your case and help determine whether it’s worth your time, money and energy to argue with the ATO.