How an Australian individual requests or receives an amendment to an income tax assessment, the time limit that applies, and how shortfall penalties and the reasonably arguable position test work — for tax agents and accountants advising individual clients.
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Amendment time limits table
| What | Value | Note | | --- | --- | --- | | Source | all figures below | https://www.ato.gov.au/individuals-and-families/your-tax-return/amend-your-tax-return/time-limits-on-amendments | | Time individuals have to amend an assessment | 2 years | Page states "Individuals generally have 2 years to amend an assessment." | | ATO-initiated amendment where the taxpayer has not requested it | Not more than 2 years after the assessment was issued | Page states the ATO generally "can't amend your assessment more than 2 years after it was issued unless you request it" | | Amendment outside the time limit | Permitted in exceptional circumstances | Page gives "when evasion or fraud has occurred" as an example of exceptional circumstances | | Out of time to amend | Objection may be required instead | Page states that if you are out of time to amend your assessment "you may need to lodge an objection instead", and that an extension of time to lodge an objection may be available in some circumstances |https://www.ato.gov.au/individuals-and-families/your-tax-return/amend-your-tax-return/time-limits-on-amendments
Reasonably arguable penalty, thresholds and voluntary disclosure table
| What | Value | Note | | --- | --- | --- | | Source | all figures below | https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/penalties-for-making-false-or-misleading-statements | | Base penalty amount (BPA) — position on an income tax law that is not reasonably arguable | 25% of the shortfall amount | Applies where the resulting shortfall amount exceeds the threshold below | | Reasonably arguable threshold — taxpayers other than partnerships and trusts | Greater of $10,000 or 1% of income tax payable worked out based on their tax return | Page's own wording for "other taxpayers"; the same 1% test is applied to PRRT payable and to Australian IIR/UTPR tax payable where relevant | | Reasonably arguable threshold — partnerships and trusts | Greater of $20,000 or 2% of the entity's net income (if any) worked out based on its return | Page's own wording | | Voluntary disclosure reduction to the BPA | BPA may be reduced by 20%, 80% or, in some cases, to nil | Page states the BPA "will generally be reduced if you voluntarily tell us about the error" and that the reduction depends on when you tell the ATO and the shortfall amount | | Adjustment for aggravating circumstances | BPA can be increased | Page lists having "attempted to prevent or obstruct" the ATO from finding out about the shortfall amount or the false or misleading nature of the statement |
When an individual lodges an income tax return the ATO issues an original assessment showing the tax liability for that income year; an amended assessment issues either because the taxpayer requests an amendment (for example to include a forgotten deduction) or because the ATO reviews the return and amends it (for example disallowing a deduction that cannot be claimed under the law). A statutory time limit applies to amending an assessment and to amending an amended assessment, and the ATO states that the limit gives certainty because it means the ATO cannot amend the assessment outside that limit. Where an amendment produces a shortfall amount, administrative penalties may apply, including the penalty for treating an income tax law as applying in a way that is not reasonably arguable. Figures are for tax year 2026. The ATO pages relied on below state these time limits, penalty percentages and penalty thresholds without tying them to a particular income year, so the same figures are used here for tax year 2026.
Individuals, including sole traders, who need to correct an already-assessed income tax return, and their agents. The ATO's individuals time-limit page directs businesses and super entities to its separate "Time limits for business and super amendments" material instead, so entity amendments are outside this Guide. Partnerships and trusts are covered here only to the extent that the reasonably arguable position threshold in the table below is quoted for them; their own lodgement and amendment processes are not covered.
Amendment time limits table (https://www.ato.gov.au/individuals-and-families/your-tax-return/amend-your-tax-return/time-limits-on-amendments)
| What | Value | Note |
|---|---|---|
| Source | all figures below | https://www.ato.gov.au/individuals-and-families/your-tax-return/amend-your-tax-return/time-limits-on-amendments |
| Time individuals have to amend an assessment | 2 years | Page states "Individuals generally have 2 years to amend an assessment." |
| ATO-initiated amendment where the taxpayer has not requested it | Not more than 2 years after the assessment was issued | Page states the ATO generally "can't amend your assessment more than 2 years after it was issued unless you request it" |
| Amendment outside the time limit | Permitted in exceptional circumstances | Page gives "when evasion or fraud has occurred" as an example of exceptional circumstances |
| Out of time to amend | Objection may be required instead | Page states that if you are out of time to amend your assessment "you may need to lodge an objection instead", and that an extension of time to lodge an objection may be available in some circumstances |
Reasonably arguable penalty, thresholds and voluntary disclosure table (https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/penalties-for-making-false-or-misleading-statements)
| What | Value | Note |
|---|---|---|
| Source | all figures below | https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/penalties-for-making-false-or-misleading-statements |
| Base penalty amount (BPA) — position on an income tax law that is not reasonably arguable | 25% of the shortfall amount | Applies where the resulting shortfall amount exceeds the threshold below |
| Reasonably arguable threshold — taxpayers other than partnerships and trusts | Greater of $10,000 or 1% of income tax payable worked out based on their tax return | Page's own wording for "other taxpayers"; the same 1% test is applied to PRRT payable and to Australian IIR/UTPR tax payable where relevant |
| Reasonably arguable threshold — partnerships and trusts | Greater of $20,000 or 2% of the entity's net income (if any) worked out based on its return | Page's own wording |
| Voluntary disclosure reduction to the BPA | BPA may be reduced by 20%, 80% or, in some cases, to nil | Page states the BPA "will generally be reduced if you voluntarily tell us about the error" and that the reduction depends on when you tell the ATO and the shortfall amount |
| Adjustment for aggravating circumstances | BPA can be increased | Page lists having "attempted to prevent or obstruct" the ATO from finding out about the shortfall amount or the false or misleading nature of the statement |
PS LA 2012/5 base penalty amounts by behaviour table (https://www.ato.gov.au/law/view/pdf?DocId=PSR%2FPS20125%2FNAT%2FATO%2F00001&filename=law%2Fview%2Fpdf%2Fpsr%2Fps2012-005c5.pdf&PiT=20191025000001)
| What | Value | Note |
|---|---|---|
| Source | all figures below | https://www.ato.gov.au/law/view/pdf?DocId=PSR%2FPS20125%2FNAT%2FATO%2F00001&filename=law%2Fview%2Fpdf%2Fpsr%2Fps2012-005c5.pdf&PiT=20191025000001 |
| BPA — intentional disregard of a taxation law by the entity or their agent | 75% of the shortfall amount or part | Practice statement PS LA 2012/5 table of base penalty amounts |
| BPA — recklessness by the entity or their agent as to the operation of a taxation law | 50% of the shortfall amount or part | Practice statement PS LA 2012/5 table of base penalty amounts |
| BPA — failure by the entity or their agent to take reasonable care to comply with a taxation law | 25% of the shortfall amount or part | Practice statement PS LA 2012/5 table of base penalty amounts; the behaviours considered are those exhibited at the time of, or in connection to the making of, the statement |
MT 2008/2 base penalty amount and threshold example table (https://www.ato.gov.au/law/view/document?docid=MXR%2FMT20082%2FNAT%2FATO%2F00001)
| What | Value | Note |
|---|---|---|
| Source | all figures below | https://www.ato.gov.au/law/view/document?docid=MXR%2FMT20082%2FNAT%2FATO%2F00001 |
| BPA under subsection 284-90(1) for a penalty imposed under subsection 284-75(2) | 25% of the shortfall amount, or the part of it, that resulted from taking a position on the law that was not reasonably arguable | MT 2008/2 paragraphs 24 and 57 |
| Threshold worked through in MT 2008/2 Example 1 | Greater of $10,000 or 1% of the income tax payable | On the example's facts (tax payable of $50,000) the 1% figure is $500, so the $10,000 limb applied and a $7,000 shortfall did not meet the threshold |
Four-year business amendment period table (https://www.ato.gov.au/Business/Privately-owned-and-wealthy-groups/What-you-should-know/Tailored-engagement/Assessments-and-amendment-periods/)
| What | Value | Note |
|---|---|---|
| Source | all figures below | https://www.ato.gov.au/Business/Privately-owned-and-wealthy-groups/What-you-should-know/Tailored-engagement/Assessments-and-amendment-periods/ |
| Standard ATO amendment period for most businesses in privately owned and wealthy groups | Four years | Page states the exception is where evidence of fraud or evasion is found, in which case there is no time limit; it also notes different amendment-period rules can apply in some transfer pricing, research and development and capital gains tax cases |
Drafted by OpenAccountants. Not yet reviewed or approved by a named accountant.
Other Australia computations in the OpenAccountants Tax Library.
PS LA 2012/5 base penalty amounts by behaviour table
| What | Value | Note | | --- | --- | --- | | Source | all figures below | https://www.ato.gov.au/law/view/pdf?DocId=PSR%2FPS20125%2FNAT%2FATO%2F00001&filename=law%2Fview%2Fpdf%2Fpsr%2Fps2012-005c5.pdf&PiT=20191025000001 | | BPA — intentional disregard of a taxation law by the entity or their agent | 75% of the shortfall amount or part | Practice statement PS LA 2012/5 table of base penalty amounts | | BPA — recklessness by the entity or their agent as to the operation of a taxation law | 50% of the shortfall amount or part | Practice statement PS LA 2012/5 table of base penalty amounts | | BPA — failure by the entity or their agent to take reasonable care to comply with a taxation law | 25% of the shortfall amount or part | Practice statement PS LA 2012/5 table of base penalty amounts; the behaviours considered are those exhibited at the time of, or in connection to the making of, the statement |https://www.ato.gov.au/law/view/pdf?DocId=PSR%2FPS20125%2FNAT%2FATO%2F00001&filename=law%2Fview%2Fpdf%2Fpsr%2Fps2012-005c5.pdf&PiT=20191025000001
MT 2008/2 base penalty amount and threshold example table
| What | Value | Note | | --- | --- | --- | | Source | all figures below | https://www.ato.gov.au/law/view/document?docid=MXR%2FMT20082%2FNAT%2FATO%2F00001 | | BPA under subsection 284-90(1) for a penalty imposed under subsection 284-75(2) | 25% of the shortfall amount, or the part of it, that resulted from taking a position on the law that was not reasonably arguable | MT 2008/2 paragraphs 24 and 57 | | Threshold worked through in MT 2008/2 Example 1 | Greater of $10,000 or 1% of the income tax payable | On the example's facts (tax payable of $50,000) the 1% figure is $500, so the $10,000 limb applied and a $7,000 shortfall did not meet the threshold |https://www.ato.gov.au/law/view/document?docid=MXR%2FMT20082%2FNAT%2FATO%2F00001
Four-year business amendment period table
| What | Value | Note | | --- | --- | --- | | Source | all figures below | https://www.ato.gov.au/Business/Privately-owned-and-wealthy-groups/What-you-should-know/Tailored-engagement/Assessments-and-amendment-periods/ | | Standard ATO amendment period for most businesses in privately owned and wealthy groups | Four years | Page states the exception is where evidence of fraud or evasion is found, in which case there is no time limit; it also notes different amendment-period rules can apply in some transfer pricing, research and development and capital gains tax cases |https://www.ato.gov.au/Business/Privately-owned-and-wealthy-groups/What-you-should-know/Tailored-engagement/Assessments-and-amendment-periods/
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