Objections, reviews and appeals

Contributed by AnnetteMorgan and current to 27 July 2018

You generally have either two years or four years in which to lodge an objection with the ATO after receiving a notice of assessment, depending on the type of taxpayer you are. If your tax affairs are simple or you are an Small Business Entity then a two year rule will apply. This period may be extended in appropriate circumstances. There is a discretion in the Acts for the ATO to accept objections lodged out of time.

In some situations, you will receive an amended assessment from the ATO. In these circumstances, you must make an objection to the amended assessment within:

• two or four years of the original assessment being served; or
• 60 days after the notice of the amended assessment is served, whichever is the later.

Though the notice of objection does not need to be in any specific form, it must adequately raise the disputed issues and the grounds you are relying on for claiming that the assessment is incorrect. Statements such as “it is incorrect” or “it is excessive” will not be sufficient. Should your objection ultimately come before the Administrative Appeals Tribunal (AAT) or a court, you may be limited to arguing the grounds of objection which were sent to the ATO. Therefore, it is most important that these grounds be clearly and fully set out. For this reason, it often is desirable to have your objection drawn up by a professional tax adviser to ensure that it is properly and comprehensively drafted and is submitted on time.

Once the objection is sent to the ATO, it will be considered and where the ATO has not made a decision within 60 days of the objection being lodged, you may write to the ATO requiring a decision to be made. Generally, if no decision is made within a further 60 days, the objection is deemed to be disallowed. This will enable you to pursue other remedies without further delay.

Where the ATO rejects an objection, you have 60 days in which to either:

• apply to the AAT for a review; or
• appeal to the Federal Court.

An application on an objection will normally be heard by the Taxation Appeals Division of the AAT.

To apply to have a decision of the ATO reviewed in the Taxation Appeals Division of the AAT will cost $920, if the tax is dispute is less than $5,000 then a fee of $91 is imposed. The cost of taking a matter to the Federal Court depends on whether you are a company or an individual. Currently, companies must pay a filing fee of $4,045, a setting down fee of $6,760 and a daily hearing fee of $2,700. The filing fee for individual taxpayers is $1,390, the setting down fee is $2,780 and the daily hearing fee is $1,100.

If your argument with the ATO is basically one of fact, it is probably preferable to have the matter heard by the AAT. Proceedings are relatively informal and the AAT is not bound by the strict rules of evidence which apply in courts. Further, if you lose your case, you will generally not have to pay the ATO’s legal costs, although you will have to pay your own legal costs. The AAT has wider power than a court to review the exercise of the ATO’s discretions, hearings are in private, your identity will not be published and, if you wish, you may be represented by lawyers or others.

Where the matter involves a question of law, or is regarded as a test case, it may be preferable to have the matter heard by the Federal Court, despite the formality and cost. In test cases, the ATO may undertake to pay your costs, even if the ATO succeeds in the Federal Court.

It is possible for you or the ATO to lodge further appeals with the Full Court of the Federal Court, though such appeals will be restricted to questions of law. The final stage in the appeal process involves an appeal to the High Court, which may only occur if that Court gives special leave to appeal.

Burden of proof

It should be noted that if you make an application, you must prove that the assessment is excessive. In other words, you will not be successful merely because the ATO cannot justify its assessment of your tax liability.

Inspector General of Taxation

If you are dissatisfied with administrative action taken by the ATO, you can complain, without charge, to the office of the Inspector General of Taxation. The office of the Inspector General of Taxsation has several dedicated Specialist Adviser on Taxation heading a team of experts for investigation and resolution of taxpayers’ disputes with the ATO. Complaints need not be limited to technical legal matters but may also relate to the fairness and efficiency of ATO procedures and policies. It should be noted that the office of the Inspector General of Taxation may be reluctant to become involved in matters which are more appropriately dealt with under the objections and appeals processes.

The office of the Inspector General of Taxation can ultimately make recommendations that the ATO reconsider decisions, explain decisions further, pay compensation or change its procedures. While these recommendations are not binding on the ATO, the Inspector General of Taxation is able to publicise his or her findings and report them to the Commissioner of Taxation, the Treasurer, the Prime Minister or Parliament.

Complaints may be made in writing to:

The Office of the Inspector General of Taxation
GPO Box 551
Sydney, NSW 2001

For more information, you can call (02) 8239 211. Information may also be obtained from, and complaints made online at the office of the Inspector General of Taxation's website at http://www.igt.gov.au/