There’s that old schtick about how people who complain about tax can be divided into two classes — men and women. But all jokes aside, if you do have a legitimate complaint to make about your tax, there are steps you can take to ensure you will get a better hearing.
There are forms at the ATO you can use to make a complaint, and there is also a ‘complaints online‘ form, but before you get to that stage it’s more than likely that one phone call could be all it takes to resolve the problem, as many misunderstandings can be cleared up just by talking to the right person (here is a list of numbers for individual and business problems).
If you do telephone, you will more than likely be given a tax officer who will handle your query and see it through. It is always a good idea too to write down all that you think may be relevant, and to keep any emails exchanged, and of course keep the name and number of the person you speak to.
If however you have wound up making a more formal complaint, the ATO has undertaken to come back with a decision within 56 days for most objections, but within 28 days for private rulings on income tax or fringe benefits tax matters. The ATO may want to negotiate a completion date, but that will be on a case-by-case basis.
Most individuals have up to two years in which to lodge a complaint after a tax assessment is issued, but others can get up to four years (although the time limit in some circumstances is even as short as 60 days). But even if a problem surfaces later, you can still go back and appeal to have it reviewed again.
If the decision goes your way, you will be refunded for any overpayments you may have made, but you may also be entitled to interest on that money – and, if the ATO has not automatically included interest in the refund cheque, it may be to your advantage to ask.
Assessments that miss the mark
If you think a tax assessment is wrong, it will be a good idea to first go over all the details in your tax return or activity statement and check this against your notice of assessment — just in case. Ask this office if you require help with this. If it still seems to be wrong, or if you have extra information that may change it, write to the ATO and ask for an amendment to the lodged tax return and the assessment (here is a link to get the required forms).
If the ATO does not agree to amend your assessment, you can lodge an objection. Or if it amends an assessment and it has taken a different stance to you (for example, you requested an amendment to include a deduction but were allowed only part of the deduction), you can object to that decision (and here are those forms). Again, ask this office if you need help with this.
The ATO will review its original decision, and says these reviews will be carried out by a tax officer who was not involved in the original decision. It will let you know the outcome in writing, and if you’re still not satisfied the next step is to ask for an independent external review of the ATO’s actions and decisions about your tax affairs.
You will probably have a choice about the body that can be involved at this stage — either applying to the Administrative Appeals Tribunal or appealing to the Federal Court. When the ATO lets you know its decision, it should also explain how these options differ and how to access each.
Going legal on them
With federal income tax matters, the ‘burden of proof’ usually rests with the taxpayer, so you will need to go into the tribunal or court being able to prove that the tax assessment is incorrect — or, more pertinently, that your view of the tax outcome is the correct one — and support this with evidence, documents, and sound technical analysis.
If you do get this far, don’t forget that you have rights under Freedom of Information legislation (FoI), just in case there are facts or data that could back-up your case. The FoI rules give you the right to access information the ATO holds about you, and you can also access documents that may have helped the ATO come to decisions about your tax situation, such as public rulings and guidelines. Under this legislation, you also have the right to correct information that the ATO holds that you believe is incomplete, incorrect, out of date or misleading.
The disclosure of certain documents may not be possible, as some are exempt from the FoI act, such as information that ‘could reasonably be expected to prejudice an investigation’ or that would necessarily involve disclosing information about someone else.
Ask first, but if you need to make a request for information under FoI, you will need to make it in writing, and there may be a fee. See here to make a request under the Freedom of Information scheme.
The Administrative Appeals Tribunal is less formal than a court hearing, but it can confirm, vary or set aside the ATO decision. You can appear yourself or be represented, and there is an application fee, which is refunded if the hearing goes your way.
Under the umbrella of the Administrative Appeals Tribunal is the Small Taxation Claims Tribunal, which provides a quicker and cheaper review if the amount of tax in dispute is less than $5,000. Either way, if you are not satisfied with the tribunal’s decision you can appeal to the Federal Court.
You may have been able to go directly to the Federal Court in some instances, and bypass the Administrative Appeals Tribunal. But once at the Federal Court, procedures get much more formal. You will probably need legal representation and there are a lot more fees (filing fee, ‘setting down’ fee and daily hearing fee, for example).
After this level of intervention, the next steps up the legal ladder are the Full Federal Court and then the High Court — but these are rare options for most taxpayers, and these courts won’t grant a hearing for every appeal that is requested.
Taking one for the team
If you think what you’ve been through can help level the tax playing field for other taxpayers, you can apply, via this office if you like, to have your case funded under the ‘test case litigation program’.
This operates alongside all the other dispute resolution protocols, and can reimburse some or even all of your legal costs if it is decided that your case has important implications for the wider community and the administration of the tax system.
It may be, for example, that your case happens to involve a particular area of tax law in which there is uncertainty and that has not been tested in the courts before — and that the public interest will be served by seeing it go through the courts.
Applicants are reviewed by an independent panel of legal and accounting professionals and senior tax officers. See here for how to apply for test case funding.
The CDDA scheme
However, there is another option with regards to seeking compensation. Any member of the public who suffers loss or damage because of a government agency’s mistake or poor administrative practices can apply for recompense through the government-wide CDDA Scheme (“Compensation for Detriment Caused by Defective Administration”).
The CDDA Scheme allows government agencies to compensate people who have experienced detriment as a result of an agency’s defective action or inaction. The scheme applies across all government agencies, including Centrelink, Veterans Affairs and the ATO (here is a list of all other agencies involved). The Commonwealth Ombudsman says it can provide compensation where there is a moral rather than a legal obligation to do so.
The aim of the scheme is to “restore a person to the position they would have been in if there had been no defective administration”. “Defective administration” broadly means an agency’s unreasonable failure to comply with its own administrative procedures, institute more appropriate procedures, or give proper advice.
The CDDA scheme is not designed to be another path to assess legal liability, although legal principles and practice are useful guides to resolve claims. For example, there will need to be some evidence to support a claim, but usually not the extensive documentation that a court would require.
Payments made under the CDDA Scheme are discretionary, which means there is no automatic entitlement to a payment. Some claims are decided by the Minister for Revenue and Assistant Treasurer. You can find out more here about the CDDA Scheme, and the Commonwealth Ombudsman has produced a fact sheet on it, which can be found here (fact sheet number nine). You can also call the Ombudsman’s office on 1300 362 072.