Small & medium businesses now have more time to get tax returns right

If you run a small or medium business, you know that financial accuracy’s important but sometimes mistakes can happen or information can change. Starting this year, though, you have more time to amend your return and get things right.

Before this change, small and medium businesses generally had a two-year period from the date of their tax assessment to request an amendment. If you discovered an error or omission after this two-year window, correcting it could become a more complex process.

Now, for the 2024–2025 and later income years, small and medium businesses with an annual aggregated turnover of less than $50 million will have up to four years to request amendments to their income tax returns. This gives more time to review records, reconcile figures and address any oversights – but remember, it’s not an excuse to rush your first lodgment.

For earlier income years, the two-year amendment period still applies.

Your review period starts the day after the ATO issues your notice of assessment for the relevant income year. If no notice is issued, it starts from the date you lodged your return.

Why would I need to amend my business’s return?

Here are some common scenarios where you might need to request an amendment:

• you made a simple error when entering figures;
• you forgot to report some income or capital gains, or claim legitimate deductions;
• you incorrectly claimed deductions or credits, or failed to claim ones you were entitled to; or
• circumstances changed after lodging and affected something you’d already reported, like a revised invoice or a business event you hadn’t factored in.

Whatever the reason, it’s important to correct any errors as soon as you identify them. For example, if an amendment leads to an increased tax liability, time-based interest and penalties might apply, so prompt action’s still beneficial.

What’s next?

If you discover an error or omission in a lodged tax return:

• Consult your registered tax practitioner: Navigating tax law can be complex, but they can provide tailored advice and ensure your amendment’s correctly lodged, help you understand the implications of amendment and ensure you meet all ATO requirements. Many businesses have their tax agent handle amendments directly.
• Act promptly: Even for returns with the new four-year window, don’t delay. Lodge your amendment request as soon as you discover the need, so there’s plenty of processing time. You can submit multiple requests within the period if needed.
• Maintain meticulous records: Keep all your invoices, receipts, bank statements and other financial documents well organised. If you don’t have adequate records, your amendment request may not be successful.
• Understand lodgment methods: Amendments can be requested online via ATO online services for business, or through your registered tax agent using SBR-enabled software. A paper request by letter may be an option, but online methods are generally quicker.

Important reminders

There are no ATO fees for amendment requests, but processing can take a substantial amount of time.

If you discover an error that increases the tax you owe, you may face interest charges and penalties. However, voluntary disclosure of mistakes is generally viewed more favourably than errors discovered during an audit.

If the ATO’s already notified you of an audit or review, you must tell the assigned tax officer about any errors rather than lodging an amendment request.

Once the four-year period for amendment expires, the ATO generally can’t make changes to your assessment (except in cases of fraud or evasion).

And, remember: the extended amendment period offers greater peace of mind, but good record-keeping and a proactive approach remain your best tools for managing your tax affairs effectively.

Source: ATO - Request an amendment to a business or super tax return