If you have made a mistake or left something out when you provided information to the ATO about your tax affairs, you may wish to make a voluntary disclosure.
But does this mean that you are admitting to wrongdoing?
Why make a voluntary disclosure?
The benefits of making a voluntary disclosure are that if you are liable to penalties, they may be reduced. The level of penalty reduction depends on when the disclosure is made, with greater reductions generally applying to disclosures made before the ATO notifies you of a review or audit.
Do I need to admit liability?
The ATO states that “You do not need to admit that there is a liability or that you were incorrect in your original statement when you make a voluntary disclosure.”
You may believe that you acted in accordance with the law, or perhaps you are unsure, and just want to ensure that you are being diligent.
In such cases, you could state that the voluntary disclosure is for “protection” or has a nature similar to a “without prejudice disclosure”. This will influence the ATO’s approach to examinations and adjustments, but not their approach to penalty reductions.
How do I make a disclosure?
There are several methods available to make a voluntary disclosure:
- In writing – either in a letter to the ATO, or on forms for specific types of voluntary disclosure such as requests for excise amendment and amendment of income tax return for individuals.
- Electronically – for example, an individual may make a voluntary disclosure by amending their tax information through myTax.
- Over the phone or face-to-face – this can only be done when you have been informed of an examination of your tax affairs (an audit or a review).