• Self-assessment and the taxpayer

    Australia's income tax system is based on self-assessment. This means that information you provide to the ATO is initially accepted as being true and correct when you lodge your tax return and other forms on which you disclose your tax liability. These forms may include activity statements and pay as you go (PAYG) instalment statements.

    The self-assessment system places the onus on you to ensure your tax return complies with taxation laws. You must show all your assessable income and that you claim only the deductions and offsets (formerly called rebates) to which you are entitled.

    From 1 July 2012, this system was extended to indirect taxes. You are generally entitled to self-assess your liabilities or entitlements under the laws applying to:

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    How the self-assessment system works

    Under the self-assessment system, we accept the claims you make in your tax return, usually without adjustment, and issue a notice of assessment. Even though we may initially accept the tax return, the return may still be subject to further review.

    To ensure the integrity of the tax system, the law provides us with a period where we may review a return and may increase or decrease the amount of tax payable.

    This period of review depends on a number of factors, including whether or not you are in business and whether tax was avoided as a result of a scheme or fraud.

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    How to correct an error

    When you sign your tax return, you are taking responsibility for the claims you are making. We assume you have completed your tax return in good faith. If you become aware that your tax return is incorrect, you must contact us as soon as possible to correct the error.

    Where we detect errors, we may issue an amended assessment. You are then obliged to repay any tax owing, together with interest and penalties as prescribed by law. If you have overpaid your tax, we will pay you interest on the overpayment.

    You will not be subject to penalties if your tax claim is based on wrong information contained in one of our publications. However, interest could be payable depending on the circumstances of the case.

    Voluntarily disclosing mistakes in your tax affairs that increase your tax or decrease your credits will, in most cases, open the way to concessional treatment for both penalties and interest charges.

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    We can help you to get it right

    Whether you prepare your own return or pay a registered tax agent to do it for you, we provide comprehensive information to help you decide what you are entitled to claim.

    If you're lodging your own tax return this year, we have a free option for lodging online - myTax. We also provide Individual tax return instructions and supporting publications on our website.

    In addition, we provide guidance in the form of public rulings and product rulings. If your situation is not covered in these publications, you can request a private ruling.

    People on low incomes can take advantage of our Tax Help program.

    If you take reasonable care with your tax affairs, you will not incur a penalty for honest mistakes, although you may still be liable to pay interest on any underpaid tax.

    If you make a mistake, you can request an amendment. Voluntary disclosures attract lower penalties than would apply if we find out that you have omitted income or over-claimed deductions and offsets or credits.

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      Last modified: 18 Feb 2016QC 16257