Respond to an ATO review or audit
The ATO is asking you to account for decisions you made years ago.Four years ago you and your accountant treated a transaction a particular way. A letter has now arrived asking you to explain it, and what you can show is whatever you happened to keep at the time. We work out first whether the position you took can be sustained, then answer the ATO in a way that puts your best case on the record, and manage disclosure and penalties if part of it can’t be. You find out where you stand before the ATO tells you.
An independent view first
You find out whether your position holds before you commit to an answer the ATO will hold you to.
One considered response
The ATO decides on your best case rather than on a drift of partial answers sent under pressure.
Penalties argued, not accepted
A shortfall penalty turns on how your conduct is characterised, and that is an argument worth having.
What is the difference between a review and an audit?
A review is the ATO looking at something and asking questions about it. An audit is the formal examination that follows if the answers don’t resolve the issue, and the Taxation Administration Act 1953 (Cth) (the Act) gives the ATO wide powers to require information and documents once one is under way. The practical difference is what your answers are doing: in a review you are trying to close the question, and in an audit you are building the record that a shortfall and any penalty will be decided on. The Act also sets the penalty scale, which turns on how the ATO characterises the conduct behind a shortfall rather than on the size of the shortfall itself.
What is the difference between a review and an audit?
A review is the ATO asking questions about something it has noticed. An audit is the formal examination that follows when the answers don’t settle the question, and it carries wider information-gathering powers. Both are worth taking seriously, because what you say in a review shapes whether there is an audit at all.
What penalties apply if the ATO finds a shortfall?
Shortfall penalties are set as a percentage of the tax. They run at 25 per cent for failing to take reasonable care, 50 per cent for recklessness and 75 per cent for intentional disregard. It can be lifted where you obstruct the audit, reduced where you disclose voluntarily, and interest accrues on the shortfall regardless.
Does making a voluntary disclosure help?
Usually, and the timing decides by how much. A disclosure made before the ATO notifies you of an audit reduces the penalty substantially, and one made afterwards reduces it by far less. Get advice on what to disclose before you disclose it.
How long does an ATO audit take?
It depends on how complex the issues are and how quickly information moves, so some resolve in a few months and others run considerably longer. What you can control is the quality of the first substantive response, which is the single biggest influence on how long the rest takes.
Want to know whether your position will hold?
Before you answer anything, it is worth having someone independent tell you whether the treatment you took is defensible. We will give you that view first, and it changes what the right answer to the ATO looks like.
You are being asked to justify a decision made with what you knew then
The ATO has questioned how you treated something, and the answer you give will decide both whether there is a shortfall and what the penalty on it is. You think the treatment was right, but you are working from records kept for running a business rather than for defending one. And every reply you send becomes part of the record, including the ones you sent before you understood what was being asked.
- We will give you an independent view of whether your tax position is defensible.
- We will assemble the records and documents that support it.
- We will write and lodge the response to the ATO.
- We will advise on voluntary disclosure and argue the penalty where there is a shortfall.
Nothing has gone wrong, and you are still being asked to prove it
The business has been running well for years. You lodge on time, you pay what the returns say, and where something was complicated you asked your accountant and did what they advised. The letter that arrived doesn’t say you have done anything wrong: it asks about a deduction, a distribution or a structure from a few years back, and asks for the documents behind it. What unsettles you isn’t the question, it is that the answer depends on paperwork you had no particular reason to keep.
What's included in your ATO review and audit service
- An independent view on whether the position you took is defensible.
- A review of the records and documents behind the transactions in question.
- A written response to the ATO that answers what was actually asked.
- Advice on voluntary disclosure and what it does to the penalty.
- Management of all ATO contact through to the final position.
The penalty is decided by how your conduct is characterised
An unconsidered answer is the expensive part of an audit, not the original transaction. Shortfall penalties run at 25 per cent of the tax where the ATO says you failed to take reasonable care, 50 per cent for recklessness and 75 per cent for intentional disregard, and which of those you get is a judgement about you rather than a calculation. It can be lifted again by 20 per cent if you obstruct the audit or if you have been here before. The general interest charge accrues on the shortfall the whole time, and since July 2025 you can no longer deduct it. And the window for a voluntary disclosure that cuts the penalty substantially closes the moment the ATO tells you an audit has started, so the value of getting in front of something is highest on the day you least feel like dealing with it.
How we get you to a position the ATO will accept
The first thing we do is form our own view of whether your treatment was right, and tell you, including when the answer is that part of it wasn’t. If it holds, we put that case properly: the transaction explained, the documents assembled, the legal basis stated, in one response rather than in a drift of partial answers. If it doesn’t hold, we deal with that deliberately, using disclosure where disclosure helps and arguing the characterisation of the conduct, because that is what sets the penalty. Either way the audit stops being an open-ended series of questions and becomes a matter with a position, a timeline and an end.
How we work through an ATO audit
Find out where you stand before you answer, not after.Know where you stand
We form an independent view of whether your treatment was right, and tell you what we think before you commit to an answer.
Answer on the record
We assemble the documents and write one considered response, so the ATO is deciding on your best case rather than on fragments.
Settle the penalty
Where there is a shortfall, we argue the characterisation of the conduct and use disclosure where it reduces what you pay.
An independent read on your position before you answer the ATO
The unfair part of an audit is not the scrutiny, it is the hindsight. You made a decision with the facts and the advice available at the time, and it is being examined years later by someone who already knows how it turned out and whose job is to test it.
We have a Chartered Tax Advisor with The Tax Institute on the team, a credential held for twenty-five years, and we deal with the ATO often enough to know which questions are routine and which ones mean the officer has formed a view. We are ISO 9001 accredited as well, so your file runs to a defined process rather than to whoever picks up the phone.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Answer the ATO once, and properly
Send us the letter and the transactions it asks about. We will tell you whether your position holds, and take the response from there.
More on this area of law
Read more about ATO audits, shortfall penalties and dealing with the Tax Office.
5 ways business owners can accidentally trigger a tax audit
5 ways business owners can accidentally trigger a tax audit
It all starts with a notice from the ATO You are busy running your business, juggling the day-to-day and keeping busy with customers, employees and back-end