On Friday 26th March the Australian Tax Office (ATO) announced that it will permanently install its independent review service following a successful three-year pilot program which gained the approval of its participants, whether they got the outcome they hoped for or not.  

In a statement released by the ATO, the tax agency proclaimed that the small businesses who had participated in the pilot believed that the process was fair and independent, regardless of the independent review outcome.

The service is now going to be made available for eligible businesses who have an annual turnover of under $10 million in relation to disputes about income tax, excise, GST, luxury car tax, wine equalisation tax and fuel tax credits. The service however won’t cover superannuation or fringe benefits tax.  

Prior the ATO rolling out its small business pilot program in 2018, the independent review process was only available for businesses who had a turnover of more than $250 million. The small business pilot program was originally only supposed to last 12 months, however it was later extended in February last year following a very strong approval rating.

Since the start of the pilot program, over 1,200 small businesses have been offered the service, with over 180 having actively used it since its inception. 

The purpose of the program was to empower small businesses by giving them an avenue to dispute auditing decisions made against them by the ATO in a swift and cost-effective manner. The ATO believes that it is crucial for small businesses to be provided with an opportunity to dispute auditing decisions and pursue a fair resolution with the ATO. 

The ATO believes that “independence is critical when handling a dispute, so we ensure each and every independent review is done by an officer from a different part of the ATO who was not involved in the original audit”.

Thanks to the new program, taxpayers will now be able to request in-house facilitation at any stage of a dispute with the ATO. An independent review will take place prior to any amended assessment and any resulting debt that’s raised.  

As part of developing an ATO position in an audit, a business owner now has the opportunity to respond to the audit team’s findings. Those findings are disclosed in the interim position paper.

The audit team will subsequently consider the business owners response and the areas of disagreement as they develop the final audit letter, which is then sent to the business owner or their representative.

Business owners can only 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 open to the business owner and the audit team to discuss potential dispute resolution approaches. The independent review process is not intended to limit opportunities for this to occur.

Australian Small Business and Family Enterprise Ombudsman has also applauded the ATO’s decision to offer the service to small business owners on a permanent basis, as it in line with the Australian Small Business and Family Enterprise Ombudsman advice to the Tax Office.  

The Australian Small Business and Family Enterprise Ombudsman is very approving of the ATO’s decision to take “a proactive approach with this commitment to help resolve small business tax disputes”.

In a statement the Australian Small Business and Family Enterprise Ombudsman has said that “the Australian Tax Office has acted quickly to implement a key recommendation in our recently released report, a tax system that works for small business, which will help support small businesses when they disagree with an ATO audit position.”