A message lands in your myGov inbox: “Review of your tax return” or “We need more information”. Your stomach drops. Before anything else, know this: most ATO letters to individuals are requests for evidence, not accusations, and the people who come out of them well are the ones who respond on time, with records, and without guessing.
This guide explains what the different ATO letters mean (data-matching, review, audit and amended assessment), how to confirm a letter is genuine, exactly what to do in the first 28 days, what happens after you respond, the penalties and interest that can apply and how they are reduced, and your rights to object and seek review. It is checked against the ATO’s own guidance on information gathering, penalties, objections and the ATO Charter.
If you have not received a letter and want to understand why people do, read our guide to what triggers a tax audit in Australia. If you have, keep reading – and if you would rather hand it to someone, our tax audit assistance service handles the ATO for you.
Key takeaways
- Check it is genuine before you act: real ATO contact comes through myGov, post or your agent, never through a link or QR code, and never with threats of arrest or demands for gift cards or crypto. Verify on 1800 008 540.
- Read what is actually being asked. A data-matching letter, a review, an audit and an amended assessment call for different responses.
- Respond within the deadline – usually 28 days. If you do not, the ATO amends your return using its own data.
- Send copies of records, never originals, and never invent evidence. A false statement to the ATO is itself penalised.
- Outcomes: no change, or an amended assessment due in 21 days with shortfall interest (7.51% a year this quarter, non-deductible) and penalties of 25%, 50% or 75% that voluntary disclosure can cut to as little as nil.
- You have rights: independent review, objection, the Administrative Review Tribunal, the Federal Court and the Tax Ombudsman – and a payment plan if you owe money you cannot pay at once.
ATO letters at a glance
| Letter | What it means | Typical deadline | What to do |
|---|---|---|---|
| Data-matching letter (income, deductions or offsets) | Third-party data does not match your return; the ATO proposes an amendment | 28 days, then the ATO amends automatically | Check the data; agree, or respond with evidence |
| Request for information / review | The ATO is checking specific claims (a risk review) and wants supporting documents | As stated, commonly 28 days | Send copies of the records for the items named |
| Audit notification | A comprehensive examination of your affairs for one or more years | Scope and timeframe agreed at the start | Engage your tax agent; agree scope; provide records |
| Formal notice to provide information or attend | The ATO is using its legal powers because the cooperative approach has not worked | 28 days by default | Comply – failure can lead to prosecution |
| Notice of amended assessment | The ATO has already changed your return | Pay within 21 days; object within 60 days or the normal period | Pay or arrange a plan; object if you disagree |
Source: ATO, employment income data-matching letter; our formal notice powers; amended assessment from data matching. Checked 7 October 2026.
Step 1: make sure the letter is really from the ATO
Scammers imitate ATO letters, emails and texts because the fear works. The ATO’s verify or report a scam page lists what it will never do: it “will never send unsolicited messages containing hyperlinks or QR codes”, will never ask for personal identifying information by email or SMS, will never ask for payment “via gift cards, crypto, cash delivery or personal/offshore accounts”, and “will never threaten you with arrest or demand you stay on the line”. Genuine ATO messages go to your myGov inbox, and “you’ll get an email, SMS or push notification from myGov when there’s a new message” – the message itself is read inside myGov, not through a link.
If you are unsure, do not reply to the message or call the number in it. Sign in to myGov or the ATO app directly and look for the correspondence, use the “Verify call” feature in the app, or phone the ATO on 1800 008 540. If you use a tax agent, they can see genuine ATO correspondence in Online services for agents.
Step 2: work out what kind of letter it is
Data-matching letters
The most common letter individuals receive. The ATO has matched your return against information from an employer, bank, share registry, health fund, crypto exchange or government agency and found a difference. The letter sets out the ATO’s figures and proposes an amendment. “If you disagree with the amounts reported, you have 28 days to respond.” If you do nothing, “we will automatically amend your tax return with the information we have”. Often the third-party data is right and the quickest resolution is to agree; sometimes it is wrong – a duplicated income statement, an account that is not yours – and your evidence fixes it.
Risk reviews and requests for information
A review is the ATO checking particular items – work-related expenses, rental deductions, a capital gain – to see whether there is a compliance issue worth pursuing. The ATO’s cooperative approach says: “We prefer to gather your information by simply requesting it from you.” It commits to explaining why it wants the information, giving you the chance to discuss scope and relevance, and telling you when it will reply. The ATO’s documents to support and verify your claims page lists what to send for each claim type and asks for copies: “Don’t send your original documents to us.”
Audits
An audit is broader and deeper. The ATO’s audit guidance commits it to keeping you “fully informed of the audit’s progress”, advising you “immediately if we decide to broaden the scope”, providing a position paper before finalising so you can respond, and advising the outcome in writing “generally within seven days of making our decision”. Where penalties are proposed, “we will tell you our reason and give you the opportunity to make a submission for reduction or remission”. Most individual matters never reach this stage; a review that finds nothing material closes.
Formal notices
If the cooperative approach fails, the ATO can issue a formal notice requiring you to give information, produce documents or attend and give evidence. “We generally give you 28 days to comply with a notice.” Refusing or failing to comply, or making a false or misleading statement, can lead to prosecution. A formal notice is a sign the matter has escalated; get professional help immediately.
Step 3: what to do in the first 28 days
- Note the deadline and put it in your calendar. If you need more time, ask before it passes, not after.
- Identify exactly what is being questioned – which year, which label, which claim or income item. Answer that, not everything.
- Gather the records. Receipts, invoices, bank statements, logbooks, hours diaries, rental statements, loan statements, broker reports. The ATO’s substantiation rules are strict: “If an expense is subject to substantiation, it must be supported by particular forms of written evidence – if not, your claim is not deductible.”
- Do not invent or backfill. A diary written last week for last year is not a record, and a false statement attracts its own penalty. If you cannot prove a claim, say so – a voluntary correction is treated far more leniently than a disproved one.
- Engage your tax agent or appoint one. An agent can see the ATO’s correspondence, speak to the case officer, frame the response and protect your position. The ATO Charter commits the ATO to “work with people you have chosen to represent you”.
- Respond in writing through the channel the letter specifies – usually ATO online services or your agent – and keep a copy of everything you send.
- If you find errors elsewhere in the return while gathering records, consider disclosing them at the same time. Penalties are reduced for voluntary disclosure even after an examination has started.
Example: Manpreet’s work-related expenses review
Manpreet, a disability support worker, receives a review letter asking for evidence of $4,800 of car expenses and $1,100 of phone and internet claims in her 2024-25 return. She has a logbook covering a 12-week period for the car and her phone bills, but she had estimated the work-use percentage on the phone. With her agent she sends the logbook and bills, recalculates the phone claim from a four-week record of actual use (dropping it from 80% to 55%), and tells the ATO in the response. The car claim is accepted in full, the phone claim is reduced by about $340, and because the correction was volunteered within the review the ATO remits the penalty on that small shortfall. She pays the extra tax and interest and the matter closes within six weeks.
Step 4: what happens after you respond
There are three outcomes. The ATO accepts your evidence and finalises the review with no change. It adjusts some items and issues a notice of amended assessment. Or, rarely, it escalates a review into an audit. Where an amended assessment issues, “the due date for payment is 21 days after we notify you of the amounts”. Requesting that the ATO look at its decision again “does not change your objection rights or extend the timeframe to object”, so track the objection deadline separately.
Penalties
Under the ATO’s penalties for false or misleading statements, the base penalty is a percentage of the shortfall: 25% for failure to take reasonable care, 50% for recklessness and 75% for intentional disregard. It is increased by 20% if you obstructed the ATO, knew about the shortfall and did not disclose it within a reasonable time, or have had the same penalty before. It is reduced for voluntary disclosure – by 80% if you tell the ATO before it notifies you of an examination (and to nil where the shortfall is under $1,000), and by 20% if you disclose after being notified and the disclosure saves the ATO significant time. The ATO also has a general discretion to remit, and if it refuses you can object to that decision.
There is a safe harbour: no penalty applies where the statement was made by your registered tax or BAS agent, you gave the agent all the relevant information, and the error was the agent’s failure to take reasonable care. Keeping the emails and documents you gave your agent is how you prove that.
Interest
An amended assessment carries shortfall interest charge on the extra tax for the period between when it should have been paid and when the assessment is corrected – 7.51% a year for October to December 2026 (the 90-day bank bill rate plus 3%). Unpaid amounts after the due date attract general interest charge, 11.51% for the same quarter, compounding daily. Both can be remitted in extenuating circumstances, and the ATO says it “may reduce this charge if the shortfall amount results from an unprompted voluntary disclosure”. Since 1 July 2025, neither charge is tax deductible.
Rule of thumb
Answer the question asked, by the date asked, with copies of real records, and disclose anything else you find. Every one of those four things reduces the penalty, the interest or the chance of escalation. Silence, delay and improvised evidence do the opposite.
Step 5: if you disagree
You do not have to accept the ATO’s view. The ATO Charter says you can “request to have many of our decisions reviewed by an independent officer who was not involved in the original decision”, and “if you disagree with our internal review, you can ask for an external review”. Your options, in the order you would normally use them:
- Talk to the case officer, then their manager. Many disputes are factual and resolve with one more document or explanation.
- Small business independent review (turnover under $10 million): before an assessment issues, “a tax officer with no previous involvement in your matter will review the supporting documents, facts and technical merits of your position and the audit position”. Request it within 14 days of the offer. Details on the ATO’s independent review page.
- Lodge an objection. Free, online through ATO online services. Time limits are “2 years for most individuals, small businesses and medium businesses” and “4 years for all other taxpayers” from the assessment; for an amended assessment or a penalty, the later of 60 days from the notice or the original period. See what you can object to and the time limits.
- External review. If the objection fails, apply to the Administrative Review Tribunal (which “replaced the Administrative Appeals Tribunal (AAT) from 14 October 2024”) for a merits review, or appeal to the Federal Court, within 60 days of the objection decision. The ATO’s external review page explains both.
- Complain. For how you were treated rather than the tax outcome, lodge a complaint with the ATO (acknowledged within three business days, aiming to resolve within 28) and, if unsatisfied, ask the Tax Ombudsman for an independent investigation on 1300 448 829. “Making a complaint will not affect your relationship with us.”
If you owe money you cannot pay at once
An amended assessment does not have to be paid in one hit. The ATO’s payment plans let you pay weekly, fortnightly or monthly instalments over “the shortest possible fixed period of time”. Individuals and sole traders owing $200,000 or less can set one up in ATO online services without speaking to anyone. General interest charge keeps accruing on the balance, future obligations must be lodged and paid on time, and any refunds are offset against the debt – so pay it down as fast as you can.
Common mistakes
- Ignoring the letter. The ATO decides without you and the result is almost always worse.
- Clicking a link in a text or email. Real ATO messages are read inside myGov.
- Sending everything instead of what was asked, or sending originals.
- Manufacturing records. A false statement adds a 75% penalty tier and can lead to prosecution.
- Arguing instead of documenting. Case officers respond to evidence, not frustration.
- Missing the objection deadline because you were waiting on an informal review.
- Assuming an audit means jail. Prosecution is reserved for deliberate fraud and evasion; for almost everyone the outcome is an amended assessment, interest and a penalty that good conduct reduces.
The ATO’s guide to deductions you can claim is the standard your evidence will be measured against – worth reading before you respond, not after.
FAQ about ATO audit letters
How do I know an ATO audit letter is real?
Genuine ATO contact arrives in your myGov inbox (with an email or SMS from myGov telling you there is a message), by post, or through your registered tax agent. The ATO says it “will never send unsolicited messages containing hyperlinks or QR codes”, will never ask for personal identifying information by email or SMS, never demands payment by gift cards, crypto or personal or offshore accounts, and never threatens arrest. If anything feels off, do not click or call back the number in the message – phone the ATO on 1800 008 540 or check the message in the ATO app.
How long do I have to respond to an ATO letter?
Usually 28 days. The ATO’s data-matching letters say “you have 28 days to respond” and that if no response arrives it “will automatically amend your tax return with the information we have”. Formal notices also allow 28 days by default. The letter itself states the due date; if you cannot meet it, contact the ATO or have your agent request an extension before it passes.
What happens if I ignore an ATO review letter?
The ATO proceeds on the information it holds. For a data-matching letter it amends your return and issues a notice of amended assessment with the extra tax, shortfall interest and possibly a penalty, due 21 days after notification. Ignoring a formal notice to provide information or documents can lead to prosecution. Silence never improves the outcome.
What penalties can the ATO charge after an audit?
Penalties for false or misleading statements are 25% of the tax shortfall for failing to take reasonable care, 50% for recklessness and 75% for intentional disregard. They rise by 20% if you obstructed the ATO or have been penalised before, and fall by 20%, 80% or to nil if you disclose voluntarily. Shortfall interest charge applies to the extra tax (7.51% a year for October to December 2026), and from 1 July 2025 that interest is no longer tax deductible. You can ask for penalties and interest to be remitted and object if refused.
Can I dispute the result of an ATO audit?
Yes. You can lodge an objection – free, online through ATO online services – within two years of the assessment for most individuals and small and medium businesses, four years for others, and within 60 days of a penalty or amended assessment if that is later. If you disagree with the objection decision you can apply to the Administrative Review Tribunal or appeal to the Federal Court within 60 days. Small businesses with turnover under $10 million can also ask for an independent review before an assessment issues.
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If an ATO letter has arrived, the next 28 days matter more than anything that happened before it. Nanak Accountants handles reviews, audits, objections and payment plans for individuals and businesses across Australia through our tax audit assistance service. Call 1300 626 258 and send us the letter before you reply to it.
This article is general information only and is not personal tax advice. Response timeframes, scam indicators, penalty and interest rules, objection and review rights and payment plan terms were checked against ATO pages on 7 October 2026. Interest rates quoted are the ATO’s published rates for October to December 2026.
