The ATO has extended the amendment period for income tax returns from 2 years to 4 years for small and medium businesses. The period commences from the day on which the Commissioner gives notice of the assessment to the taxpayer. The extended period is applicable for assessments in relation to income years starting on or after 1 July 2024.
The previous 2-year period was considered too short, as outside of this window you would otherwise have to engage in costly and lengthy objections and appeals processes with the Commissioner.
Your application for an amendment must be in the approved form and given to the Commissioner before the expiry of the 4-year period.
These amendments intend to reduce some administrative and financial burden for small and medium business entities and avoid some instances of pursuing objections and appeals.
Small and medium business entities
You are a small or medium business entity for an income year if you:
- carry on a business during the income year, and
- one or both of the following applies:
- the aggregated turnover of your business in the previous income year was less than $50 million, and/or
- your business’s aggregated turnover for the current year is likely to be less than $50 million.
What doesn’t change
The Australian Taxation Office (ATO) may continue to decline amendment requests where they believe that the requested amendment would result in the assessment not correctly reflecting your taxable income.
Also note that there is no change to the length of time you are required to keep records for your business. You need to keep records for your business in case the ATO wants to audit your tax return. Generally, records are required to be maintained for 5 years from the date on which the record was prepared or obtained, or from the time the relevant transaction or act was completed, whichever is the later.
For instances such as fraud and tax evasion, the amendment period does not apply and the Commissioner may amend your return at any time.
Please do not hesitate to contact our office should you have any queries.