How far back can the ATO audit you?

How far back the ATO can audit you for income tax is generally 2 years for most individuals and small businesses, and for medium businesses for income years starting on or after 1 July 2021, and 4 years for most other taxpayers, counted from the day it gives you the notice of assessment. There is no time limit if the Commissioner forms the opinion there has been fraud or evasion (Income Tax Assessment Act 1936 (ITAA 1936), s 170(1)).

Strictly, these are limits on amending an assessment: once the period ends, the ATO generally can't increase the tax for that year, however many questions it asks. See how we help with ATO audits, reviews and objections.

How far back can the ATO audit? The time limits at a glance

Tax and taxpayer	General time limit	Law
Income tax: most individuals and small businesses, and medium businesses (aggregated turnover under $50 million) for income years starting on or after 1 July 2021	2 years after the notice of assessment	ITAA 1936 s 170(1) items 1–3
Income tax: everyone else, including larger businesses and many trust beneficiaries	4 years after the notice of assessment	s 170(1) item 4
Income tax: cross-border transfer pricing adjustments	7 years after the notice of assessment	Income Tax Assessment Act 1997 (ITAA 1997) s 815-150
Income tax: fraud or evasion, in the Commissioner's opinion	No time limit	s 170(1) item 5
Income tax: section 100A and other listed provisions	No time limit	s 170(10) and (10AA)
GST and fuel tax credits	4 years after the BAS is lodged (the "period of review")	Taxation Administration Act 1953 (TAA) Sch 1 s 155-35
NSW payroll tax, land tax and duty (Revenue NSW, not the ATO)	5 years after the initial assessment, with exceptions	Taxation Administration Act 1996 (NSW) s 9(3)

Who gets 2 years and who gets 4?

The 2-year period applies to most individuals, including sole traders whose business is a small or medium business entity, and to companies and trusts that are small or medium business entities (s 170(1) items 1–3). A small business entity carries on a business and generally has aggregated turnover under $10 million (ITAA 1997 s 328-110). A medium business entity would qualify if that threshold were $50 million (ITAA 1936 s 170(14)).

Medium business entities only get 2 years for income years starting on or after 1 July 2021 (Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020, Sch 3 item 40(6)). Before that, a business with aggregated turnover from $10 million to under $50 million was generally on 4 years.

Everyone else gets 4 years (item 4), including:

• Trust beneficiaries. An individual or company that is a beneficiary of a trust at any time in the year is on 4 years, unless the trust is a small or medium business entity or its trustee is a full self-assessment taxpayer. A family trust that only holds investments usually doesn't carry on a business, so it generally isn't a small business entity and its beneficiaries are usually on 4 years.
• Partners in a partnership that carries on a business, unless the partnership is a small or medium business entity.
• Schemes. The 2-year period doesn't apply if it is reasonable to conclude that someone entered into or carried out a scheme for the sole or dominant purpose of the taxpayer getting a scheme benefit in relation to income tax for that year.
• Larger entities and super funds. Businesses with aggregated turnover of $50 million or more are on 4 years, and so, generally, are super funds, which don't usually carry on a business.

When does the clock start?

The period runs from the day the ATO gives you notice of the assessment, not from the end of the financial year (s 170(1)).

• Individuals: when the ATO gives you the notice of assessment after processing your return.
• Companies and super funds: these are full self-assessment taxpayers, so the return is treated as the notice of assessment, given on the day it is lodged (s 166A(3)).

For example, suppose an individual's notice of assessment for 2023–24 was given on 15 August 2024. If the 2-year period applies, the ATO generally has until 15 August 2026 to amend it. On 4 years, it has until 15 August 2028.

The clock only starts once there is an assessment. A return lodged years late starts its own period from its notice of assessment. If you never lodge, the period never starts, and the ATO can make a default assessment of what it considers your taxable income to be (s 167), with the amendment period running from the day its notice is given.

Can the ATO audit you after 7 years?

In some cases, yes. The ATO can backdate an amendment beyond the usual 2 or 4 years where:

1. the Commissioner is of the opinion there has been fraud or evasion (s 170(1) item 5),
2. a provision listed in s 170(10) or (10AA) applies, such as section 100A, which deals with trust entitlements arising from reimbursement agreements (see section 100A trust reviews),
3. cross-border transfer pricing rules apply, which allow amendments within 7 years (ITAA 1997 s 815-150(1)),
4. no return was lodged, so no period has started, or
5. the amendment gives effect to an objection, review or appeal (s 170(1) item 6).

Closed years can still matter. If a tax loss or a capital gains tax cost base from an old year is used in a year that is still open, the ATO can generally examine it when reviewing the open year.

What counts as fraud or evasion?

The ATO's practice statement PS LA 2008/6 treats fraud and evasion separately. Fraud involves making false statements knowingly, or recklessly, to deceive the Commissioner. Evasion is a lower bar, but it still needs blameworthy conduct, and the ATO says neither is to be inferred lightly. Under that guidance, a senior officer (Executive Level 2 or Senior Executive Service) must form the opinion personally, separately for each year amended outside the normal period, and the taxpayer should normally be told the ATO is considering it.

An opinion of fraud or evasion can be tested in an objection. See tax evasion and ATO fraud investigations.

Can the ATO extend the time limit?

Yes, if it has started examining your affairs for that assessment and hasn't finished by the end of the period (s 170(7)). The period doesn't pause while an audit runs. It can be extended:

• by consent: before the period ends, the ATO asks and you agree in writing to an extension for a specified period, or
• by Federal Court order: on the ATO's application before the period ends, if it wasn't reasonably practicable, or was inappropriate, for the ATO to finish in time because of something you did, or something you reasonably should have done and didn't.

Extensions can be given more than once (s 170(8)). Agreeing gives the ATO more time, and refusing may lead it to issue amended assessments on the information it already has, so get advice on the length and scope of any extension before you sign.

Can you amend your own return after the time limit?

Generally not. The same periods limit amendments that reduce your tax, with some relief:

• Apply in time. If you apply for an amendment in the approved form before the period ends, the ATO can make it afterwards (s 170(5)).
• Small and medium businesses can have 4 years to ask. Where the ATO's own period is 2 years, a small or medium business entity can apply in the approved form for an amendment up to 4 years after the notice of assessment (s 170(1) item 3A). This only applies to assessments issued after 1 January 2025 for income years starting on or after 1 July 2024 (Treasury Laws Amendment (2024 Tax and Other Measures No. 1) Act 2024, Sch 3 item 6), so it doesn't help with earlier years.
• Objections to an income tax assessment can generally be lodged within 2 years after the notice where items 1, 2, 3 or 3A apply, and 4 years otherwise (TAA s 14ZW(1)(aa)). So a small or medium business may have 4 years to ask for an amendment but generally only 2 years to object. A late objection can be lodged with a written request for an extension of time, which the ATO may refuse (s 14ZW(2)). See ATO objection time limits.

Once an assessment has been amended, the normal period still runs from the original notice (s 170(2)). A fresh 2- or 4-year period, running from the notice of the amended assessment, applies only to revisit the particular item that was changed, and only in limited ways (s 170(3) and (4)).

How far back can the ATO go for GST?

Generally 4 years, whatever the size of the business. Lodging a BAS is treated as the ATO assessing your net amount and giving notice that day (TAA Sch 1 s 155-15). The ATO can then amend the GST (and fuel tax) assessment during the period of review, which ends 4 years after that day (s 155-35(2)). The exceptions follow income tax:

• no time limit if the Commissioner is of the opinion there has been fraud or evasion (s 155-60(c)),
• extensions by consent or Federal Court order (s 155-35(3)–(5)),
• an amendment you apply for within the period can be made later (s 155-45), and
• if no BAS was lodged, the Commissioner may assess at any time (s 155-5(1)).

Super, payroll tax and other taxes

• Super taxes assessed by the ATO. Division 293 tax, excess transfer balance tax and first home super saver tax follow the same TAA amendment rules as GST, so the 4-year period of review generally applies (TAA Sch 1 ss 155-5(2) and 155-35). As they aren't self-assessed, it runs from the day the ATO gives notice of the assessment (ss 155-15, 155-35(2)).

• Super guarantee charge and fringe benefits tax are assessed under their own Acts, the Superannuation Guarantee (Administration) Act 1992 (s 37) and the Fringe Benefits Tax Assessment Act 1986 (s 74), each with its own amendment rules.

• NSW payroll tax, land tax and duty. The Chief Commissioner of State Revenue generally can't reassess more than 5 years after the initial assessment (Taxation Administration Act 1996 (NSW) s 9(3)). Exceptions include giving effect to an objection or review, and cases where the relevant facts weren't fully and truly disclosed and the tax was assessed too low as a result, which doesn't require fraud. For payroll tax, the assessment is made when Revenue NSW calculates the liability from a return (s 8(3)). The limit is on reassessments, so if no assessment was ever made, for example because no payroll tax return was lodged, there is generally nothing for the 5 years to run from. See NSW land tax, payroll tax and duty disputes.

How long do you need to keep tax records?

Generally 5 years, but when the 5 years start depends on the record.

Records	Keep for	Law
Business records	5 years after they were made or obtained, or the transaction was completed, whichever is later	ITAA 1936 s 262A(4)
Work expense evidence	5 years from the due date for lodging the return, or from lodgement if later	ITAA 1997 s 900-25
Capital gains tax records	5 years after it becomes certain no further CGT event can happen for which they could be relevant	ITAA 1997 s 121-25
GST and fuel tax records	The longest of 5 years after the transaction, the period of review, and any refreshed period after an amendment	TAA Sch 1 s 382-5(1)
NSW state tax records	The same 5-year rule as business records	Taxation Administration Act 1996 (NSW) s 53

Longer periods apply if the amendment period has been extended (s 262A(4)(b)) or you are in a dispute about a work expense when the 5 years end (s 900-25(3)). Failing to keep records can attract an administrative penalty (TAA Sch 1 s 288-25).

What this means in practice

• Don't assume an old year is closed. Check the notice date and whether a trust, partnership or scheme puts you on 4 years.
• Interest builds on old years. Shortfall interest charge on an amended assessment runs from the original due date until the day before the ATO gives notice of the amendment (TAA Sch 1 s 280-100), and general interest charge then applies to anything not paid by the new due date (ITAA 1997 s 5-15). Neither is deductible if incurred in an income year starting on or after 1 July 2025, whichever year the shortfall relates to (s 26-5(1A)). See shortfall interest charge.
• Correcting an error early usually costs less. A voluntary disclosure made before the ATO tells you it is examining your affairs generally reduces the base penalty by 80%, or to nil for a shortfall under $1,000 (TAA Sch 1 s 284-225). See making a voluntary disclosure and what happens in an ATO audit.

Next step

Send us the ATO's letter or audit scope, the notices of assessment (or BAS lodgement dates) for the years it is asking about, and any request to extend the amendment period. Tell us the business's turnover in those years and whether you were a trust beneficiary or a partner. In a short first call we'll work out which time limits apply and which years are still open.