Finance expert reveals how to respond to Australian tax office message which could cost thousands

Australians are being warned not to ignore a letter from the tax office advising of a mistake on their tax return as it could end up costing them thousands of dollars.

As part of a crackdown on dodgy claims, the Australian Taxation Office will be sending out an increasing number of data matching letters stating certain financial details have not been declared.

The missing information may be money from a previous job throughout the financial year, bank interest or welfare payments, news.com.au reported. 

Etax senior tax agent Liz Russell said it was important for Australians targeted by the ATO not to panic, stressing that choosing to throw the note away was not an option. 

Tax experts say if Australians receive a data matching letter from the Australian Taxation Office, they should not ignore it as it could end up costing them thousands of dollars (stock image)

‘It means that someone has lodged a tax return that the ATO believes may not contain all the information, or may contain incorrect information,’ Ms Russell said.

‘The ATO is fed information from different institutions and then they do a data match with the tax return.’

Ms Russell said if the recipient ignores the letter, they put themselves in a position where their tax return is ‘adjusted based on assumptions’.

This could end up costing them ‘hundreds, if not thousands of dollars’.  

Ms Russell said many Australians did not know the ATO could audit tax returns up to three years after one had been lodged.

Recipients have 28 days to respond to the letter. Penalties could apply.  

‘If they don’t hear from you in that time they will reassess you no matter what, so you have to do something if you don’t believe it’s correct, and even if it is correct and you’ve done it inadvertently, you should contact the ATO to see if any penalties are reduced,’ Ms Russell said. 

The type of data matching letter an individual could receive depends on the discrepancy identified in their tax return (stock image) 

The type of data matching letter an individual could receive depends on the discrepancy identified in their tax return (stock image) 

Not every tax return lodged is data matched by the ATO. 

The ATO website states they use data matching to ensure there are no discrepancies on an individual’s tax return. 

‘Providing details of income received, tax withheld and other tax-related data is required by law,’ the website says.

‘We match the data we hold with details provided on your tax return. If we identify differences, we may send you a letter outlining the discrepancy.’

The ATO said the type of data matching letter an individual could receive depends on the discrepancy identified.   

‘Generally, when we send a data-matching letter, it will relate to a tax return lodged more than a year ago. We can only issue letters after we receive all relevant information from other organisations. Delays can occur as some organisations may take longer to report,’ the ATO website says. 

‘Each letter we issue will clearly show the financial year to which it relates.’

Those who receive a data matching letter have the option to agree or disagree with the information contained in the letter.   

‘If you receive a data-matching letter from us, you will need to review your records. The action you take will depend on whether you agree or disagree with the information included in your letter,’ the ATO website says.  



Read more at DailyMail.co.uk