You are allowed to take issue with the ATO if it disagrees with your self-assessment of your tax position.

If you believe the ATO’s assessment is incorrect, the first step is straight forward and fairly informal. You contact us and we start making inquiries. If it still seems the assessment is wrong, or if you can provide us with extra information that may change it, we can lodge an amendment with the ATO.

But if the ATO disagrees, we can lodge an objection on your behalf (in other words, we can disagree with the disagreement). We can also object if the ATO amends an assessment and has taken a different stance to us on particular things (for example, we thought you were eligible to claim a deduction but were allowed only part of it).

Objections are required in writing, detailing all the reasons we think a decision is incorrect. This requires us to prepare a document that includes, where relevant, references to legislation, rulings or case law. It will also be necessary to include any supporting documents and information that relates to the decision.

The ATO will review its original decision with a tax officer, generally not the one involved in the original decision. It will then let us know the outcome in writing (referred to as an “objection decision”), but if you’re still not satisfied, the next step is to ask for an independent external review of the ATO’s actions and its decisions about your tax affairs.

This escalation process can get costly, so you need to consider the value of taking this next step.

Tax laws specifically give you the right to go to the Administrative Appeals Tribunal (the tribunal) or the Federal Court of Australia for a review of some of the ATO’s actions or decisions. When the ATO lets you know its decision, it will also explain how these options differ. It allows 60 days from the date of this decision notice to seek a tribunal or court review.

When taking the tribunal or court route
The burden of proof is on taxpayers. You will need to go into the tribunal or court being able to prove the ways in which your idea of the tax outcome is the right one, and support this idea with evidence, documents, and sound technical analysis (which of course we can help you with).

The tribunal is less formal than a court hearing, but its powers are substantial enough. 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. If you are not satisfied with the tribunal’s decision you can appeal to the Federal Court.

Be warned, though: Things get a lot more formal at the Federal Court. You will generally need legal representation and there are a lot more fees (filing fee, “setting down” fee and daily hearing fee, for example). So you want to be sure the claim is worth it.

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 every appeal requested.