An ATO review letter arrived. Here's what to do in the first 48 hours.
The first response should be organised, not defensive. Protect the deadline, preserve the evidence and understand the scope before answering.
First, confirm the letter is genuine
Do not use a phone number or link in a suspicious message until you have checked it independently. Review the communication in ATO online services or ask your registered tax agent to confirm it through Online services for agents. If needed, call the ATO using a number published on ato.gov.au.
Record the officer's name, contact details, case reference, issue under review, income years involved, response date and every document requested. A review is a risk assessment. An audit is generally a more detailed examination of identified risks. The letter should tell you which process has started.
Protect the response date
Acknowledge receipt and nominate one contact person. If the time allowed is not workable, ask for an extension early and explain why. Do not assume a request will be granted, and do not let the due date pass while records are being gathered.
Your adviser should understand whether the request is cooperative or made under a formal notice. Formal notices carry legal obligations and need specific handling. The ATO states that it will allow sufficient time to seek advice about legal professional privilege and its administrative concessions, but those claims need to be identified correctly.
Preserve the source material
Tell the relevant people not to delete, alter or recreate records. Preserve accounting files, bank statements, contracts, invoices, payroll records, emails, board papers and working papers connected to the issue. Keep the original files and create a controlled working copy for review.
Do not clean up the narrative by changing dates or descriptions in the ledger. If an entry is wrong, document the original, the correction and the reason. A transparent correction is easier to explain than a record that no longer matches the source documents.
Build an issue map before sending documents
For each ATO question, identify the relevant transaction, tax treatment, source evidence, person who knows the facts and any gap. Reconcile amounts to the lodged return and financial statements. This produces a response that is complete and consistent without burying the answer in unrelated files.
- What fact is the ATO trying to verify?
- Which document proves that fact?
- Does the document contain unrelated private or privileged material?
- Does the explanation agree with prior lodgments and correspondence?
- Is there an error that should be disclosed rather than defended?
Control communication
Keep a contact log and save every version of what is sent. Answer the question asked in plain language, attach an indexed set of evidence and identify anything that will follow. Avoid speculation. If you do not know, say what is being checked and when you will respond.
An ATO review is not automatically an accusation. Cooperative, timely engagement can resolve a risk without escalation. It also does not mean every request should be answered without review. The goal is an accurate response that respects both the firm's obligations and the taxpayer's rights.
Primary sources
Rules and lender requirements change. These sources were checked when this article was published.
This article is general information current at the date of publication. It doesn't take your circumstances into account and isn't tax, legal or financial advice. Speak to a registered tax agent about your situation.
