Independent Resolution Process for Small Businesses Now Permanent

Small businesses now have another pathway to resolve tax disputes, with the ATO making its independent review service a permanent option for eligible small businesses (those with a turnover of less than $10 million). The service was initially conceived as an avenue for small businesses to obtain early and fair resolution in relation to audit positions.

The original pilot commenced in 2018 and centered around income tax audits in Victoria and South Australia. The trial was expanded in 2020 to include income tax audits in all other Australian states and territories, along with other areas of tax including GST, excise, luxury car tax, wine equalisation tax and fuel tax credits. After what the ATO considers a successful multi-year pilot, the service has now become a permanent feature.

“Small businesses who participated in our pilot told us they found the process to be fair and independent, irrespective of the independent review outcome, so this is a great result, and is a big part of why we are locking this service in permanently”, ATO Deputy Commissioner Jeremy Geale has said.

Independent Review

An eligible small business can request an independent review if it disagrees with some or all of an audit position and an offer for an independent review has been made by the ATO. However, such a review will not be the first opportunity the business has to respond to ATO audit findings. Initial findings will be disclosed in an interim positions paper, and the small business can raise areas of disagreement before the final audit letter is sent out.

If a small business is eligible for a review, that business’s ATO audit case officer will make contact and a written offer of independent review will be included in the audit finalisation letter. If the business wishes to proceed with the review, it will need to contact the ATO through the relevant email address within 14 days of the date of the audit finalisation letter. The ATO notes that such an email must clearly specify and outline each area of disagreement with the audit position.

As a part of the review process, the business will be asked to complete and return a consent form to extend the amendment period, which will allow the ATO to complete the review before the period of review for the relevant assessment ends. According to the ATO, the review cannot be commenced unless the consent form is completed and received.

Where a small business obtains approval to use the independent review service, an independent reviewer will be allocated to the case and contact the business to discuss the process. Although this process involves an in-house ATO officer, this officer will be from a different part of the ATO to the original case officer, and will not have been involved in the original audit.

It is important to note that the areas of superannuation, FBT, fraud and evasion finding, and interest are not covered under the independent review service. Where a small business dispute relates to those areas or the business does not want to pursue the independent review process, other options including lodging an objection or using an in-house facilitation service. Businesses can also raise matters with the Inspector-General of Taxation and Tax Ombudsman or the Australian Small Business and Family Enterprise Ombudsman.

Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.