Income Tax Disputes – What They Are


With tax season once again in full swing, many people find themselves lodging paperwork with the ATO and hoping for the best. The complexity of Australia’s tax legislation makes it difficult to navigate without professional help. For those who choose to go it alone, mistakes and omissions can land you in hot water with the ATO, and you may find yourself with a dispute that needs to be resolved.

ATO disputes can be a stressful process, but it’s the best way to look after your personal or business interests at tax time. In this article we’ll explore tax disputes in more detail, as well as some of the things you can do to avoid finding yourself in that situation.

What is an ATO Tax Dispute?

A tax dispute is the process of disagreeing with a decision the ATO has made about personal or business tax and superannuation liabilities. If you disagree with an ATO decision, lodging a dispute allows you to argue your case and/or work with the ATO to reach a more favourable outcome. You can object to most ATO decisions, with some of the most common disputes occurring due to:

  • Australian Business Numbers
  • Cash flow boost
  • Excise
  • Fringe Benefits Tax
  • Fuel schemes
  • Fuel tax credits
  • Goods and Services Tax
  • Income tax
  • Luxury Car Tax
  • Penalties and interest
  • Single Touch Payroll
  • Superannuation
  • Wine Equalisation Tax

During the dispute resolution process, you (and your representatives) will work with the ATO to review the decision. You will have a chance to present evidence that proves your claims and demonstrates why the ATO’s decision should not have been made. If successful, this can significantly reduce (or eliminate) tax debt and assist you to pay off the amount sooner.

If your tax dispute is unsuccessful, you may have the right to an external review by the Administrative Appeals Tribunal or the Federal Court of Australia.

How to Avoid the Need for Tax Dispute

Tax disputes arise due to ATO decisions. These decisions are typically made at audit, when the ATO reviews your personal or business’ finances and finds discrepancies between income, deductions, claims and liabilities. This means the best way to avoid the need for a tax dispute is to keep honest accounting and avoid attracting an audit. You can reduce the chances of being audited by:

  • Lodging your tax returns on time. The best way to stay on top of your tax and superannuation obligations is to lodge all information when it’s due. This prevents those last-minute mistakes and may reduce scrutiny.
  • Double checking deductions. Be sure that you only claim deductions you’re entitled to. Before lodging your income tax return, double check each deduction and review any calculations you had to make for items such as depreciation.
  • Keeping detailed records. If the ATO does audit you, detailed records are your best defence. Individuals and businesses must keep evidence (such as receipts, invoices, payslips and accounting ledgers) for a period of at least 5 years.
  • Working with an accountant. The ATO has made it easier than ever to manage your own taxation obligations. That can be helpful, but navigating complex taxation issues is a challenge without professional help. If you run a business, operate a side hustle, own substantial property, inherit assets or if you are the beneficiary of a trust, working with an accountant is the best way to keep your records in order.

It’s important to note that the ATO is flexible regarding honest mistakes. Tax law is complex, and the ATO understands that we aren’t all experts, so there will be plenty of chances to rectify any mistakes you might have made in your income tax returns.

How to Lodge a Tax Dispute with the ATO

The ATO contacts around 2 million people each year about their income tax assessments. Not all of these cases become audits, but if you’re unhappy with the ATO’s decision then you are entitled to lodge a tax dispute. How you lodge your dispute depends on whether you are an individual, sole trader or other business operator.

If you want to lodge a tax dispute then it’s important to speak with an experienced taxation lawyer first. Tax lawyers are experts in Australia’s taxation system, and they will be able to tell you whether or not you have a case. If you do have a genuine dispute, your tax lawyer can lodge your dispute with the ATO, assist you in gathering relevant evidence, and develop a case that allows you to reach a more favourable outcome.

Resolve Tax Disputes and Manage Your Liabilities with FP Lawyers!

Dealing with the ATO can be a time-consuming and stressful experience. Whether you’re resolving a small income tax issue or a major business dispute, it’s vital that you work with a tax lawyer Brisbane wide.

FP Lawyers are experienced tax lawyers that work with individuals and businesses throughout the Brisbane region. Our principal lawyer, Katherine Parasyn, is both an Accountant and Solicitor. That means taxation law is one of our longest-standing specialties, so our team is uniquely equipped to provide advice and legal services that assist you in dealing with ATO audits, disputes and negotiations. If you are unhappy with an ATO decision, or if you need representation in dispute resolution or litigation proceedings, contact FP Lawyers and book a confidential consultation today.

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