For a range of reasons, individuals, trusts, partnerships or companies may make errors when completing their income tax returns. For this reason, all taxpayers are allowed to amend their returns, where that occurs within permitted periods.
There are no real limits to the matters which can be the subject of an amendment, which includes unclaimed depreciation and building allowance deductions.
What are the periods?
Generally, the periods within which a taxpayer can amend their income tax returns are either 2 or 4 years.
Individuals and small businesses
Individuals have an amendment period in relation to a particular tax return of two years from the date the relevant notice of assessment was issued to them by the Australian Taxation Office. For example, if a notice of assessment was issued to an individual on 1November 2018, they would have until 31 October 2020 to lodge an amendment. This amendment period also applies to small business entities, which are broadly defined as those entities carrying on a business in the income year with an aggregated turnover in the previous year of less than $10 million.
However, the amendment period for a business which doesn’t meet this definition is four years from the date of issue of the notice of assessment.
Additionally, the four-year period applies to an individual who was a beneficiary of a trust at any time during the relevant year. This is the case unless the trust is a “small business entity” for that year, or the trustee of the trust (in that capacity) is a full self-assessment taxpayer for that year.
Companies, partnerships and trusts
The general amendment period for companies and trusts is four years after the date of issue of the notice of assessment. However, the period is two years, where companies, partnership or trusts meet the above definition of a small business entity.
How do I amend a tax return?
Basically, the Australian taxation system is “self-assessing”, meaning that taxpayers are entitled to submit their own returns and amendments, which are accepted at face value. However, this doesn’t mean that taxpayers won’t subsequently be subject to audit and review, notwithstanding that they may have received a refund payment from the ATO.
As a result, it’s critical that taxpayers have proper evidence to support their claims, in the event of an audit or review (such as quantity surveyors’ reports, in the case of depreciation and building allowance deductions), and great care should be taken to ensure that claims are appropriately described and labeled in amendments.
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