Got a letter from the ATO? What it means and what to do

A letter from the ATO can be unsettling, but most are routine, and many are sorted out quickly when you act early. This guide is for individuals, sole traders and small business owners. It explains the common types of ATO letters, how to check a letter is genuine, the deadlines that matter and how a registered tax agent can respond for you.

First steps when a letter from the ATO arrives

Before you do anything else:

1. Check it's genuine. Scammers copy the ATO's branding closely, so confirm the letter is real before you act on it (see the next section).
2. Find the key details. Note what the letter is about, the income year or period, any amount owing, the reference number and, most importantly, the date you need to respond by.
3. Gather your records. Returns, receipts, bank statements and anything else relating to the issue.
4. Get help early if you're unsure. It's much easier to ask for more time before a due date than after it.

Is it really from the ATO? How to spot a scam

The ATO does contact people by phone, email, SMS and post, which is exactly why scammers impersonate it. Here's how to check.

Look in myGov first. If your ATO account is linked to myGov, most ATO letters go to your myGov Inbox rather than the post. myGov notifications don't contain links, so sign in to myGov directly and check there.

Know what the ATO won't do. The ATO won't:

• send an unsolicited SMS or email with a link or QR code that takes you to a login page
• ask for your TFN, bank details or myGov sign-in details by email
• ask you to pay a debt with gift cards, cryptocurrency, cardless cash or by transfer to a personal bank account

Watch for pressure tactics. Threats of arrest, demands for immediate payment or being told to stay on the line so you can't speak to anyone else are classic signs of a scam.

Verify before you act. If you're not sure a letter or call is genuine, don't respond to it. Phone the ATO on 1800 008 540, using the number published on ato.gov.au rather than any number in the message. For phone calls, the ATO app also has a Verify call feature.

If you think you've been caught out, call the ATO on 1800 008 540 straight away. You can report a scam email by forwarding it to ReportScams@ato.gov.au.

Common types of letters from the ATO

Lodgment reminders and overdue notices

These usually mean a return or activity statement is missing. Ignoring them can lead to failure-to-lodge penalties and, if a cooperative approach doesn't work, a default assessment, where the ATO works out the tax you owe without your input. Penalties can apply to default assessments, and in serious cases failing to lodge can lead to prosecution. The ATO sends warnings before taking these steps, which is your chance to act. If you have several years outstanding, our page on late and overdue tax returns explains how to get back on track.

Debt and payment letters

Payment reminders escalate if they're ignored. Before issuing a garnishee notice, which lets the ATO collect money from a third party such as your bank, the ATO sends a warning letter. Company directors can receive a director penalty notice, which generally gives 21 days to take one of the options set out in it.

Data-matching and "nudge" letters

The ATO receives data from third parties such as banks, financial institutions and other government agencies. When that data doesn't match your return, it may send a letter comparing the two. The ATO says people usually have up to 28 days to check and respond before it takes further action.

Example (illustrative only): a letter says your return left out $2,000 of bank interest. If you forgot the account, an amendment may be the right step. If the interest belongs to a joint account and you declared your share correctly, you'd respond with that explanation and the supporting statements.

Reviews and audits

A review usually looks at a specific issue to decide whether anything more is needed. An audit is a more detailed examination. In both, the ATO should explain what attracted its attention and will generally ask you for information first.

If you realise you've made a mistake, telling the ATO before it notifies you of an examination can make a big difference. Penalties are generally reduced by 80% for a voluntary disclosure made before that point, and for shortfalls under $1,000 the penalty may be reduced to nil.

Notices of amended assessment

If the ATO changes your assessment, the notice will show the revised figures and may include shortfall interest or penalties. Shortfall interest charge incurred from 1 July 2025 isn't tax deductible, so it's worth resolving amounts owing quickly.

How to respond to a letter from the ATO

A clear, well-supported reply usually resolves things faster. When you respond:

• use the channel the letter asks for, such as ATO online services or a phone number you've confirmed is genuine, or respond through your registered agent
• quote the reference number and the income year or period
• answer the specific questions asked, briefly and factually
• attach supporting documents rather than just a summary
• keep copies of everything, plus a note of any calls: the date, who you spoke to and what was agreed

Why deadlines matter, and what not to do

Response dates, payment due dates and objection time limits all have consequences if they pass. A few things to avoid:

• Don't ignore the letter. Problems rarely go away, and options narrow over time.
• Don't call a number or click a link from an unexpected message. Verify first.
• Don't guess. A rushed amendment or a partial explanation can create new problems.
• Don't let a due date slip. If you need more time, ask before the date, not after it.

If you can't pay: payment plans

If a letter shows an amount you can't pay in full, contact the ATO or your agent before the due date. If you owe $200,000 or less, you may be able to set up a payment plan through ATO online services. Income tax and activity statement debts need separate plans.

General interest charge continues to accrue while a debt is on a plan, and it isn't tax deductible if incurred on or after 1 July 2025. A plan that clears the debt in the shortest realistic time will generally cost less. If there were good reasons for the delay, you can also ask the ATO to remit some or all of the interest.

If you disagree: objections and time limits

If the ATO has made a decision you disagree with, you can usually lodge an objection. It's different from an amendment, which is how you fix an error in your own return.

• Objection time limits range from 60 days to 4 years, depending on the decision.
• For an income tax assessment, many individuals have 2 years from when the notice of assessment is given, while businesses generally have 4 years.
• Sole traders now have 4 years to amend assessments for the 2024⁠–⁠25 and later income years.
• If you've missed the deadline, you can lodge the objection with a request for an extension of time, explaining the delay.

An objection needs to set out the grounds clearly and in full, with supporting evidence.

How a registered tax agent can respond on your behalf

A registered tax agent can take the back-and-forth off your plate. That can include:

• explaining what the letter means and what's being asked
• contacting the ATO and asking for more time where it's needed
• preparing responses and supporting documents for reviews and audits
• arranging payment plans and requesting remission of penalties or interest
• lodging overdue returns, amendments and objections

You'll need to authorise your agent first. Individuals and sole traders are added to the agent's client list. Companies, trusts and partnerships also need to nominate a new agent in Online services for business. For more on the benefits, read why use a registered tax agent.

How Jan can help

If a letter from the ATO has landed and you're not sure what it means, Jan can review it, explain your options and deal with the ATO for you. See how Jan handles ATO letters, reviews and audits, or book a free intro call and have the letter handy.