In answering this question, it is important to understand that:
- the ATO is responsible for ensuring that taxpayers have applied the tax laws correctly and paid the right amount of tax;
- the Administrative Appeals Tribunal and Courts are responsible for determining the better decision to be made in applying the tax laws to the facts; and
- the IGTO is responsible for determining whether the ATO has carried out its responsibilities fairly, where reasonable concerns are raised.
Accordingly, the IGTO is not empowered to determine whether there is a better decision to be made in applying the tax laws to the facts. In other words, the IGTO cannot directly change the amount of tax that has been raised in an audit. This is the role of the Tribunal and Courts.
However, the IGTO may investigate whether an ATO audit was conducted fairly and lawfully, for example, where information reasonably suggests that the ATO’s actions were unfair. If the IGTO investigation finds unfairness in the way that the ATO auditors determined the amount of tax raised, then the IGTO may make non-binding recommendation for the ATO to take action to address that unfairness. However, this ATO action may not result in a change of the amount of tax that was raised.
Taxpayers can challenge the amount of tax raised in ATO audits in a review process called the objection and appeal process (set out in Part IVC of the Taxation Administration Act 1953). Under this process, if the amount of tax that the auditors raised was incorrect, the amount of tax will be changed where the taxpayer can show what the correct amount should be.
If you believe that the amount raised is incorrect, you may challenge the decision by lodging an objection with the ATO. Information on how to object is available on the ATO's website.
If you are not happy with the ATO’s objection decision, you may appeal the decision to the Administrative Appeals Tribunal or the Federal Court of Australia.
You may wish to consider seeking legal or tax advice if you need help in these matters.
