The ATO Has Contacted Me About a Review or Audit — What Should I Do?

Respond promptly, provide what's genuinely requested, and be honest and cooperative throughout — this is consistently the approach that leads to the smoothest outcome. A review examines specific areas of concern; an audit is a broader, more thorough examination. Many reviews are resolved through straightforward clarification without escalating to a full audit, and engaging a registered tax agent to manage the process on your behalf is one of the most effective steps you can take early on.

• A risk review. Focuses on one or more specific issues the ATO has identified — deliberately narrow, to minimise disruption to the business, and often resolved through a straightforward clarification or a voluntary disclosure if something genuinely needs correcting.

• An audit. A more thorough examination — typically involving document review, sometimes interviews, and closer data analysis — usually triggered when a review identifies something needing deeper investigation.

• A simple discrepancy letter. Not a review or audit at all — just a prompt to check a specific figure against your own records, which may resolve itself with no further action once you've confirmed everything is correct.

• Figures that fall outside the ATO's industry benchmarks for a business of your type and size.

• Data-matching against bank information, third-party reporting, or other government data sources.

• A pattern inconsistent with previous years' lodgements.

• In some cases, a tip-off through the ATO's confidential reporting channels.

Reviews aren't automatically a sign of suspected wrongdoing — the ATO uses them broadly to check that reported figures make sense against the wider picture it holds, including cases that turn out to have a straightforward explanation. Staying on top of records and understanding roughly how your numbers compare to industry norms reduces the likelihood of a review being triggered in the first place.

1. Respond promptly to any request for contact or information — delay or non-response tends to escalate matters, not resolve them.

2. Engage a registered tax agent or accountant early, ideally before you respond to the ATO directly — they can manage correspondence, clarify your position, and represent you throughout.

3. Gather the requested documents and information genuinely and completely — partial or evasive responses tend to prolong the process and can raise further questions.

4. Be honest and transparent — if an error is identified, addressing it openly, including through voluntary disclosure where appropriate, is treated far more favourably than an attempt to minimise or conceal it.

5. If the audit concludes with a position you disagree with, know that dispute resolution options exist — including, for eligible small businesses, an independent review conducted by an ATO officer with no prior involvement in your case, before any amended assessment is issued.

Failing to respond to contact attempts, not providing requested information, or failing to communicate your position during an audit can specifically disqualify a small business from accessing the independent review option later — one of the most valuable protections available if you genuinely disagree with the audit's findings. Staying engaged throughout, even when the process feels stressful, preserves your options.

For eligible small businesses — broadly, those with an aggregated turnover under $10 million, for disputes about income tax, GST, excise, luxury car tax, wine equalisation tax or fuel tax credits — you can request an independent review before any amended assessment is issued. It's conducted by a senior ATO officer who had no previous involvement in your audit, specifically assessing whether the audit team's position is genuinely the better view of the law. The ATO's own data shows a meaningful proportion of these reviews result in the audit position being adjusted or withdrawn, and the option remains available alongside other dispute options like a formal objection. Eligibility criteria and any threshold settings can change, so it's worth confirming current eligibility directly with the ATO or your tax agent rather than assuming it automatically applies.

• Have I responded to the ATO's initial contact promptly, rather than letting it sit?

• Have I engaged a registered tax agent to help manage the process?

• Am I providing complete, honest information, rather than partial or defensive responses?

• If I disagree with the outcome, do I understand my options — including independent review — before it's too late to access them?

The ATO explains its risk review and audit processes, and the small business independent review option.

ato.gov.au — Small business independent review https://www.ato.gov.au/individuals-and-families/your-tax-return/if-you-disagree-with-an-ato-decision/dispute-a-decision/small-business-independent-review

• you've received any letter from the ATO about a review, audit, or discrepancy — professional guidance is worth engaging early, not after the process has progressed;

• you're not sure what's actually being requested or what it means for your business;

• you disagree with an audit's findings and want to understand your dispute options; or

• you want your records and position reviewed proactively, before any ATO contact, to identify and address risks in advance.

→ I Haven't Lodged My BAS or Tax Returns for a Long Time — Where Do I Start?

→ I Owe the ATO Money I Can't Pay in Full — What Are My Options?

→ What Accounting Records Do I Need to Keep — and for How Long?

SKC Accounting | Knowledge Centre | Knowledge Guide 094

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.