You and the ATO | MRS Accountants

The Australian Taxation System and You

Under Australian law a taxpayer is primarily responsible for their tax compliance, even where they engage a professional to assist them.

The majority of what you need to know appears within the Engagement Letter and Tax Obligations addendum to your Tax Return. However, not all matters could be included within that document so that document contains the link to this section which sets out those other matters.

The following summarises some key issues. For detailed information, ask us or see the further resources listed below.

Under the ATO’s Taxpayers’ Charter you are expected to:-

act honestly.
supply complete, accurate information for tax returns.
keep proper records for generally no less than 5 years.
take care in complying with tax obligations.
promptly lodge documents with the ATO.
pay tax on time or arrange a payment plan.
co-operate with the ATO where necessary.

We will:-

assist you to comply with taxation laws.
act lawfully in your best interests.
avoid engagements which conflict with your interests without your consent.
maintain confidences and not disclose confidential information without your authorisation (as requested by Centrelink, banks and so on).
provide accounting and taxation services competently.
advise you of tax obligations on your request, and
lodge your Income Tax Return and other documents in a timely manner if you have given us all necessary information within the time frames stipulated.

Under the self assessment system your tax bill is based on your Tax Return as lodged. Very few checks are undertaken before the ATO issues an Assessment Notice. However, the ATO relies on subsequent data matching audits and other processes to verify selected self assessments. Penalties may apply if errors are detected. In serious cases of fraud or evasion ATO may prosecute and seek a conviction, fine or prison sentence.

Amending assessments

ATO may amend assessments, but time limits apply.
ATO usually responds positively to taxpayer amendment requests, but may refuse.
Time limits: Generally two years from the date ATO issued its assessment, or four years for taxpayers with more complex affairs.
In some cases there is no time limit e.g. ATO may amend at any time where it considers tax was avoided by fraud or evasion.

Public Rulings

Public Rulings are written advice from ATO, explaining how it applies or will apply a particular tax law. It may relate to entities generally or a specified class.
Legally binding on ATO where applies to a taxpayer who acts in accordance with it.
Where a court or tribunal decision is more favourable than a Ruling, taxpayer may rely on the decision instead of the Ruling.

Private Rulings

Private written advice from ATO explaining how it considers a tax law applies to a particular taxpayer and situation.
Taxpayer may apply for a Private Ruling for a current, future or past income year or claim period.
Legally binding on ATO where applies to a taxpayer who acts in accordance with it.
Where actual law is more favourable than a Ruling, taxpayer may rely on the law instead of the Ruling.

Objecting to tax decisions
A taxpayer may object to some ATO decisions and have them reviewed e.g.:-

Income Tax Assessments and Amended Assessments.
Excess Contributions Tax Assessments.
ime limits apply. Extensions of time are sometimes granted. An objection must be in an approved form and detail the taxpayer’s position.

Appeals

- A taxpayer may appeal against an unfavourable objection decision by:-
- asking the Administrative Appeals Tribunal (AAT) to review it
- for amounts under $5,000 – asking the Small Taxation Claims Tribunal to review it, or
- appealing to the Federal Court.
- A 60 day time limit applies. AAT may grant an extension but the Federal Court may not.

Online resources

You will find useful information about tax matters generally, record keeping and substantiation requirements, at www.ato.gov.au on the internet.