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Our decision-making processes – fraud or evasion and the normal period of review

This information explains what the ATO does, in the context of self-assessment and the period of review, when we are forming an opinion that a taxpayer's behaviour amounts to fraud or evasion.

Last updated 16 May 2018

The law allows the Commissioner of Taxation to assess tax outside of the usual time limits where the Commissioner has formed an opinion that a taxpayer's behaviour amounts to fraud or evasion. This page explains the way in which we do this.

This document publishes operational information in line with requirements of the Information Publication Scheme under the Freedom of Information Act 1982, and also in line with our broader commitment under the Taxpayers' charter for transparency in dealing with taxpayers.

Self-assessment and the period of review

The Australian taxation system is a self-assessment system, which means that we generally accept the taxpayer’s assessment of their tax liability as presented in their income tax return or other return.

We may later review and audit the return if this is warranted by further information or analysis, and amend the assessment if we discover an error.

In most circumstances, the tax law puts a time limit on the period in which we can amend a tax assessment. These time limits provide certainty and finality for both the taxpayer and the Commissioner.

For most taxpayers with simple affairs, the amendment period for an income tax assessment is two years from the date that a taxpayer is issued with an assessment. For taxpayers with more complex affairs, the period of review is four years. The period of review is also four years where certain anti-avoidance provisions of the tax law apply.

However, in a case where the Commissioner forms an opinion of fraud or evasion, there is no time limit for amending an assessment.

See also:

What is fraud and what is evasion?

Fraud and evasion are separate and distinct concepts.


Fraud, in the context of our amendment powers, involves making a false representation to the Commissioner. A representation will be fraudulent if the evidence shows the person knew it was false, or made it with such indifference to its correctness that the person could not have held any real belief that it was true.


While the courts have been reluctant to define ‘evasion’, it has generally been taken to mean behaviour that involves some blameworthy act or omission that results in an avoidance or shortfall of tax. Blameworthy behaviour contrasts with what a reasonable person would have done in the circumstances.

Typically, evasion in the income tax context involves omitting income from a return or wrongly claiming a deduction without any credible or excusable explanation. Even where an act or omission is unintentional, it may still be blameworthy when judged objectively against the standard expected of a reasonable person.

In concluding whether or not evasion has taken place, it is usual to ask the following questions:

  • What should a person, standing in the taxpayer's shoes, be expected to have done if acting reasonably and honestly?
  • What reasons have been provided by the taxpayer for not doing what would be expected of such a person who acted reasonably and honestly?
  • To what extent are the taxpayer's acts or omissions still considered to be blameworthy in light of the reasons provided by the taxpayer?

Detecting fraud or evasion

Australia's tax system operates on a self-assessment basis. However, we apply a number of compliance strategies and tools, such as data matching and risk profiling, to detect cases of non-compliance.

We receive data on financial transactions from a wide range of organisations, including:

  • financial institutions
  • employers
  • other payers
  • Centrelink
  • government agencies
  • company, property and vehicle registration offices
  • overseas tax administrations.

We automatically match this with information reported to us by taxpayers. We do this to find under-reporting and over-claiming in income tax and other returns. We also share information with federal and state law enforcement agencies.

Driven by a risk management approach, returns with apparent anomalies are subject to a progressively intensive review and audit process until issues are resolved, or tax assessments amended or other action is taken as necessary.

Fraud or evasion opinion-making principles and practice

Exceptions to the time limits for amending assessments, where the Commissioner is of the opinion there has been fraud or evasion, is an essential element of a fair tax system.

We recognise that fraud or evasion are serious matters and we do not make these findings lightly. This is reflected in the principles and work practices that our case officers are required to follow when addressing issues of fraud or evasion, including:

  • considering if there is behaviour indicating fraud or evasion at the earliest practicable opportunity in a review or audit
  • keeping taxpayers informed if we are looking at the issue of possible fraud or evasion and providing them with an opportunity to respond before any opinion is formed (other than in exceptional cases)
  • seeking specialist assistance, including obtaining advice from a national panel of senior officers to promote consistent and quality decisions
  • only senior tax officers making findings of fraud or evasion under our internal delegation and authorisation arrangements.

Our approach to fraud or evasion reflects our commitment to ensuring that these cases are resolved fairly, appropriately, and as early as practicable.

See also:

Acts by agents and trustees

Generally, the law makes taxpayers responsible for the acts of their agents, and for the acts of trustees when they are a beneficiary of a trust. Accordingly, fraud or evasion on the part of an agent or trustee that results in a shortfall of tax is treated in the same way as fraud or evasion on the part of the taxpayer for the purposes of the Commissioner’s powers in amending a tax assessment.

Your rights

In exercising our powers under the law, we are committed to dealing with taxpayers and their advisers in a fair and professional way.

The Taxpayers’ Charter sets out the way we conduct ourselves when dealing with taxpayers. It will help you understand:

  • what you can expect from us
  • your rights and obligations
  • what you can do if you are not satisfied.

Find out about: