Income tax
Amended assessment
An amended assessment is a changed version of an earlier tax assessment, issued by the ATO or following a correction you request, that replaces the original figures.
After you lodge a return and receive a notice of assessment, the numbers are not necessarily final. If an error is found, either you or the ATO can change the assessment. When the ATO accepts a correction, or makes changes itself, it issues an amended assessment, which replaces the earlier one and shows the corrected taxable income and tax payable.
Taxpayers can ask for an amendment if they find they left out income, missed a deduction, or made another mistake. For individuals, this is commonly done through ATO online services. Businesses may amend through their tax agent. If the change increases your tax, you may owe the extra amount plus interest. If it reduces your tax, you may get a refund of the difference.
There are time limits on amendments. For many individuals and small businesses with simple affairs, the standard period for changes is shorter than for larger and more complex taxpayers, and different entities have different review periods, commonly two years or four years depending on circumstances. After the period ends, changes may only be possible in limited situations such as fraud or evasion. Check the ATO website for the period that applies to you.
If you find an error that results in you having paid too little tax, correcting it voluntarily is usually much better than waiting for the ATO to find it. A voluntary disclosure can reduce penalties, though interest such as the shortfall interest charge may still apply. If the ATO makes the change, penalties may apply depending on the reason for the shortfall.
The ATO can also issue an amended assessment after a review or audit if it believes the original was incorrect, for example because it finds unreported income or an overclaimed deduction. In that case you have rights to object to the decision, and can ask for an independent review. Keep your records, since you will need them to support your position.
Amendments to income tax are separate from corrections to the BAS, which have their own rules. A change in your BAS can flow through to your income figures, so keep both consistent. Retain all supporting documents for five years. This is general information only, so confirm what to do about an error with the ATO or a registered tax professional.
Worked example
Nina lodges her return and later finds she forgot $1,500 of bank interest. She requests an amendment. Her taxable income increases by $1,500, and at a 30% marginal rate she owes about $450 more tax, plus any interest. If instead she finds a missed $1,500 work-related deduction, the same arithmetic produces a refund of roughly $450.
Practical tips
- Correct mistakes as soon as you find them, since voluntary corrections generally lead to lower penalties.
- Check the ATO website for the amendment time limit that applies to you, because it varies by entity and circumstances.
- Keep records of what changed and why, and keep your BAS figures consistent with the amended return.