An ATO letter arriving just before or after tax time can be unsettling. In most cases it is a prompt to check your return, not an accusation, but how you respond still matters.
This guide explains what the ATO calls advisory letters, prompter letters and myTax nudges, how they differ from a review or audit, how to respond, and the time limits for amending a return. It covers 2025-26 returns being lodged now and the 2026-27 year. We have removed unsourced claims and quotes from the earlier version of this article, and figures were checked against ATO pages.
It is for individuals, investors and side-hustle earners who have received ATO contact. If the ATO is already asking for documents, see our guide on what to do when the ATO is reviewing your return.
Key takeaways
- The ATO uses myTax nudge messages, advisory letters and prompter letters as pre-lodgment prompts.
- A prompt is not an audit, but you should check the item and your records.
- The ATO said its data matching led to more than 595,000 individual returns being adjusted in 2024-25.
- People who lodged before pre-fill were more than twice as likely to have returns amended.
- Most individuals can amend within 2 years of their notice of assessment.
- Verify ATO contact on 1800 008 540 before responding.
Types of ATO tax time contact at a glance
| Contact | What it usually means | What to do |
|---|---|---|
| myTax nudge | An amount differs from what is expected for comparable taxpayers or your prior years | Check the amount and your records before lodging |
| Advisory or prompter letter | The ATO wants you to check an item before or after lodging | Compare with your records; amend if wrong |
| Data-matching adjustment | Third-party data does not match your return | Check the data; contact the payer if it is wrong |
| Review or audit | The ATO is examining a lodged return | Respond by the due date with evidence |
Source: ATO research on individuals, ATO AI transparency statement and ATO media release on 595,000 adjustments, checked 9 October 2026.
What is an ATO tax time warning letter?
Warning letter is a popular name, not an official ATO term. The ATO research page on individuals says it uses pre-lodgment prompts, such as myTax nudge messages and advisory letters, to encourage accurate reporting and on-time lodgment. It lists error messaging, nudge and prior-year messaging, pre-issue review and prompter letters as interventions at the prevention end of its work.
The ATO also sends email prompts during the year, and letters or SMS reminders to people who lodge late. A letter like this tells you the ATO has noticed something worth checking. It is not a finding that you did something wrong.
What is a myTax nudge?
The ATO AI transparency statement describes tax time nudging as prompts in myTax that appear when an amount you enter differs from what the ATO expects, based on comparable taxpayers and your prior years. You can review and change the amount before you lodge. Our article on how the ATO uses AI and data matching covers this in more detail.
Why does the ATO send these letters?
The ATO compares your return with information it receives. It pre-fills returns using data from employers, super funds, government agencies, health funds, banks and share registries. If your return does not match, the ATO may ask you to clarify.
The ATO said its data matching program led to more than 595,000 individual returns being adjusted in 2024-25 for missing income, overstated deductions and tax credits and other discrepancies, and more than 140,000 returns were corrected for employment income, interest, dividends, government payments, Medicare levy exemptions and private health insurance. People who lodged before pre-fill was available were more than twice as likely to be amended (ATO media release).
In April 2026 the ATO said its tax time focus areas are work-related deductions and expenses, and omitted income. Our work-related deductions guide and our tax deductions guide explain what you can claim.
How should you respond to an ATO letter?
- Check it is genuine. Log in to ATO online services through myGov or call 1800 008 540. The ATO says it will never send unsolicited emails or texts with links or QR codes (ATO scam guidance). Our guide to linking myGov to the ATO helps if you are not set up.
- Identify the item and the year. Work out whether it is about income, a deduction or something else, and whether it is before or after lodging.
- Compare with your records. Payslips, bank statements, dividend statements, platform summaries and receipts.
- Fix or confirm. If the return is wrong, amend it. If it is right, keep your evidence ready.
- Meet any deadline. If the letter asks for a reply, respond by the date or ask for more time before it passes.
If you think someone else has lodged in your name or the letter relates to income you do not recognise, see our ATO identity theft guide. If the matter escalates, our ATO dispute resolution service can help.
What are the time limits for fixing a return?
| Action | Time limit (general rule) |
|---|---|
| Amend an individual return | 2 years from the day after the notice of assessment |
| Amend a sole trader return (2024-25 onwards) | 4 years |
| Object to an assessment (most individuals and small businesses) | 2 years |
| ATO amending outside the limit | Only in exceptional cases such as fraud or evasion |
Sources: ATO time limits on amendments and ATO objection time limits. If you correct an error yourself, shortfall interest may apply to the extra tax, but disclosing before the ATO finds the error generally reduces any penalty. Base penalties are 25% for failing to take reasonable care, 50% for recklessness and 75% for intentional disregard (ATO penalties page).
Worked example: bank interest left out of an early return
Aisha lodged her 2025-26 return on 3 July 2026 with $90,000 of wages. Her bank later reported $850 of interest she had forgotten. In August she receives an ATO prompt asking her to check her interest income.
At her income, the 2025-26 rate on extra income is 30% plus the 2% Medicare levy, per the ATO resident tax rates. Extra tax: $850 x 32% = $272.
Aisha amends her return through myTax the same week. She pays the $272, plus any shortfall interest charge the ATO applies (7.51% a year for October to December 2026).
Because she corrected the error herself straight after the prompt, she is in a far better position than if the ATO had to amend the return for her.
Rule of thumb: Wait until late July to lodge, check every pre-filled figure, and add anything missing. Most ATO prompts start with income that was left out.
Common mistakes after receiving an ATO letter
- Ignoring it: an unanswered letter can turn into a review.
- Replying to a scam: never click links in unexpected messages; verify through myGov or 1800 008 540.
- Lodging before pre-fill: early lodgers are more than twice as likely to be amended.
- Removing a valid claim out of fear: if you have records, you can keep a correct claim.
- Missing the amendment window: most individuals have 2 years.
FAQ about ATO tax time letters
Is an ATO tax time letter the same as an audit?
No. The ATO describes advisory and prompter letters and myTax nudge messages as pre-lodgment prompts that encourage accurate reporting. They sit at the prevention end of its compliance activity. A review or audit is a separate process where the ATO asks for evidence about a return you have already lodged. Read the letter to see which one you have.
Do I have to reply to an ATO prompter letter?
Read it carefully. Some letters only ask you to check your return before lodging and do not need a reply. Others ask for information or set a due date, and you should respond by that date or ask for more time before it passes. If you are unsure, check your ATO online account or ask a registered tax agent.
How do I know the letter is really from the ATO?
Check it in your ATO online services through myGov, or call the ATO on 1800 008 540 using a number from the official ATO website, not the message. The ATO says it will never send unsolicited emails or texts with links or QR codes, or ask for your TFN or myGov login by SMS or email.
How long do I have to fix a mistake in my return?
For most individuals the amendment period is generally 2 years from the day after the notice of assessment. Sole traders have 4 years for 2024-25 and later years. If you are out of time, or want to dispute an ATO decision, you may need to lodge an objection, which has its own time limits.
Why does the ATO say not to lodge in early July?
Most employers, banks, health funds and government agencies report by late July. The ATO says people who lodged before pre-fill was available were more than twice as likely to have their returns amended. Waiting until pre-fill is complete reduces missing income, incorrect claims and later corrections.
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Talk to a registered tax agent
If you have received an ATO letter or nudge, Nanak Accountants can review your records, explain what the ATO is asking and lodge any amendment. Call 1300 626 258, book a 15-minute discovery meeting, explore our tax planning service or visit our home page.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO research, AI transparency, pre-fill, amendment, objection, penalties, scam and interest rate pages and ATO media releases on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
