Is an objection needed to amend a tax assessment?

A tax assessment by the Australian Taxation Office is of full effect and taken to be right even if it may be wrong. The onus is on the taxpayer to show that a tax assessment is wrong.

Assertive correction of an assessment by objection

An objection is the serious and assertive way to challenge or dispute a tax assessment. Under the income tax law, for instance, an assessment is taken to be correct and conclusive except where the taxpayer takes steps to challenge the assessment under Part IVC of the Taxation Administration Act (C’th) 1953. A tax objection is the way by which a taxpayer takes or commences that challenge.

Other methods of challenge such as seeking an amendment of an assessment, including informally, from the commissioner or seeking judicial review carry major risks and disadvantages:

Unassertive requests for an amendment

A request to a commissioner of taxation to amend an assessment, including a request for alternative dispute resolution, has almost no legal standing but it is very common. If a commissioner grants a request to amend an assessment then there is no problem. If not, can a taxpayer complain about the request or the manner in which the request was denied? The starting point is that the taxpayer had a right to make an objection but, because the taxpayer didn’t use that right, the taxpayer has no standing to demand an alteration to an assessment from the commissioner.

Unusual forms of challenge

The Australian Constitution gives citizens rights to challenge actions by Commonwealth officers. That said Australian courts have found that these constitutional rights and related laws do not extend to challenges to tax assessments, except under the most limited circumstances, as taxpayers are directed to challenge under Part IVC – they must “object”.

Judicial review and similar actions are expensive, especially when compared to the costs of preparing an objection, and the decided court cases usually show failure when they are used to challenge tax assessments with the consequence that the taxpayer is require to meet the court costs of the commissioner as well as the taxpayer’s own costs.

So it is an objection that counts

Assessments and objections are thus vital steps in Australia’s tax system that rank with the significance of tax returns.

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