What is small business independent review
Small business independent review gives you an additional option to achieve an early and fair resolution of your dispute, where you disagree with the audit position on most income tax and indirect tax obligations. It complements your existing options for independent review available through the objections process.
In an independent review, an independent ATO tax officer reviews the facts and technical merits of the audit position. They complete their review before any assessment, or amended assessment, is issued to you in relation to the audit.
If you have an audit in progress and you are eligible, we will offer you the opportunity to request an independent review.
Media: Independent review for small business
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Who can use small business independent review
Small businesses with a turnover less than $10 million may be eligible to participate in the independent review service. The following disputes qualify for independent review:
- income tax
- GST
- excise
- luxury car tax (LCT)
- wine equalisation tax (WET)
- fuel tax credits (FTC).
The following disputes are excluded from the independent review service:
- superannuation
- fringe benefits tax
- fraud and evasion findings
- interest.
When to request an independent review
As part of developing an ATO position in an audit, we give you the opportunity to respond to the audit team's findings. Those findings are disclosed in the interim position paper.
The audit team consider your response and the areas of disagreement as they develop the final audit letter, which is then sent to you (or your representative).
You may request an independent review if you disagree with some or all of the audit position and you have received an offer for an independent review.
It is also always open to you and the audit team to discuss potential dispute resolution approaches. The independent review process doesn't stop you from using other dispute resolution services.
How the independent review is conducted
An ATO tax officer, who hasn't had any past involvement in the audit, will conduct the independent review. They will:
- bring a fresh perspective to your review
- focus on the areas of disagreement identified in your request
- maintain independence throughout the process.
What the independent reviewer will do
The independent reviewer will consider the documents setting out your position and the audit position. They will schedule an informal meeting (a case conference) with you, your representatives and the audit team. This will generally be within 3 weeks of receiving your review request.
The purpose of the case conference
The case conference is an opportunity for the independent reviewer to discuss the issues with you and the audit team. It allows the independent reviewer to:
- confirm the agreed facts
- determine and, if possible, narrow down the specific areas of disagreement
- ask questions to clarify issues giving rise to disagreement.
Who attends the case conference
At the case conference, only facts, arguments, information and evidence previously provided to the audit team can be considered. So, it's important that people attending have a thorough knowledge of the facts and understanding of the issues.
For that reason, we strongly encourage you to attend the case conference. Your representative can also attend. The audit team will also attend the case conference.
How the case conference is conducted
While each case conference will be tailored to individual circumstances, there will be similarities in the process.
There will normally only be one case conference during an independent review.
You can expect to receive an agenda up to one week before the case conference. The agenda will identify any issues that the reviewer would like to specifically discuss or clarify during the conference.
The case conference will normally take between one and 2 hours, depending on the issues in dispute. As the conversation is intended to be informal, it may not follow the agenda order. However, you can expect that all the topics identified in the agenda will be covered. There will also be an opportunity for you to raise any issues not listed.
The independent reviewer will facilitate the case conference, engaging with you and the audit team to clarify issues and areas of disagreement you have raised, including the relevance of any factual and technical conclusions reached.
The independent reviewer won't provide any observations, recommendations or preliminary conclusions during the case conference.
What you can expect following the case conference
The reviewer will consider both parties’ positions and prepare written recommendations on each issue in dispute. They will communicate the outcome to you and the audit team. The audit team will finalise the audit in accordance with the recommendations.
New information or evidence
Generally, the independent review won't consider new facts, evidence or arguments that are material and have not been raised during the audit. In limited cases the independent reviewer may request additional material to understand a position that has been put forward by you during the audit. You will have 14 days to provide this information.
If new facts, evidence or arguments are introduced, the independent review will be closed, and the information will be referred back to audit. A subsequent offer of independent review will not be made.
Maintaining independence in the review
We are committed to the independence of our review process. If you participate in an independent review, we ask that neither you, nor your representative (if you have one), contact the independent reviewer to discuss your position. The case conference is your opportunity to discuss your position.
The independent reviewer will obtain the documents relevant to the final audit letter from the audit team.
Expectations of an independent review
It's important that we maintain our expectations of you to:
- comply with your obligations under the tax law
- contact us as soon as possible if you have difficulty in complying.
In delivering the independent review service, you can expect us to:
- conduct the review with independence from the audit team
- give you an opportunity at the independent review meeting (case conference) to present your story
- treat you fairly, reasonably and consistently
- consider your circumstances.
When an independent review is not available
Considering our expectations, you are not eligible for an independent review if any of the following apply:
- When requested you do not complete a consent form to extend the amendment period, to allow the review to take place.
- The relevant notice of assessment or amended assessment has already issued.
- There is an objection lodged or related party objection lodged (about the matter on hand).
- We have serious concerns that you don't intend to comply with the payment of any potential assessments, following the outcome of the independent review.
- Your business is part of a larger group of related entities with a total annual turn-over more than $10 million.
- Your business is being audited for potential tax evasion, fraud, phoenix activity or other tax crime.
- Your business is subject to a status-of-worker audit initiated from an employee notification or there is a potential sham contract or contrived arrangement.
- Your business is subject to a super guarantee audit.
- We consider the case suitable for testing via the judicial system.
You also won't be eligible if you disengaged with us during the audit process. We consider you were disengaged if you didn't:
- respond to attempts of contact from the audit team by failing to return phone calls or reply to correspondence
- provide requested information or documents or attend meetings with the audit team
- respond to the audit teams' interim position paper.
How to request an independent review
Your audit case officer will contact you if you are eligible for an independent review.
When they send you (or your representative) the final audit letter, it will also include a:
- written offer of independent review
- fact sheet explaining the process.
To request to proceed with the review, you need to email us at Independent_Review@ato.gov.au within 14 days of the date of the final audit letter. Your email must clearly specify and outline each area of disagreement with the audit position.
If you are eligible, an independent reviewer will be allocated to do the review. They will contact you to discuss the process and answer any questions you may have.
If we decline a request for independent review, we will tell you the reasons why.
We may ask you to complete and return a consent form to extend the amendment period. This will allow us to complete the review before the period of review (for the relevant assessment) ends. You will need to provide the consent form before we can start the independent review.
Other dispute and resolution options
If you seek an independent review, you still keep your full dispute and objection rights under Part IVC of the Taxation Administration Act 1953. You will also keep these rights if you are not eligible for an independent review, or if you choose not to seek an independent review.
This means that you may:
- lodge an objection to any amended assessments or notices that issue to you – your objection will also be dealt with independently by ATO tax officers
- consider using our other options for resolving disputes, including in-house facilitation service, to help resolve your dispute.
- consider raising your matter with the Inspector General of TaxationExternal Link or the Australian Small Business and Family Enterprise OmbudsmanExternal Link
Case study: requesting SBIR following an audit decision
Jane runs a café business and has recently been subject to an audit. She receives her audit decision and doesn't agree that her business income was incorrectly reported and that an administrative penalty should apply.
Jane's audit officer advises her that she is eligible for an independent review of the audit decision. She requests a review and gives her reasons for disagreement.
An independent ATO tax officer conducts the independent review. They consider the documents setting out Jane’s position and the audit position. They schedule an informal meeting (or case conference) with Jane, her representatives and the audit team.
In the case conference, the review officer discusses the issues with Jane and the audit team. The reviewer clarifies issues and areas of disagreement, including the relevance of any factual and technical conclusions reached.
Following the case conference, the reviewer considers both parties’ positions and prepares written recommendations on each issue in dispute. They communicate the outcome to Jane and the audit team.
The audit team finalises the audit in accordance with the recommendations. Jane can still object if she disagrees with the outcome.
End of example