Voluntary Disclosure to the ATO – When and How to Do It

Finding an error in a tax return you already lodged is unsettling. The instinct to leave it alone and hope nobody notices is common, but it is also the most expensive option available to you.

Voluntary disclosure to the ATO is the process of telling the tax office about a mistake before they find it themselves. It sounds intimidating, but it is one of the most protective steps you can take if something in your tax affairs needs correcting. This guide covers when to disclose, how the process works, and why timing changes everything.

What Is a Voluntary Disclosure?

A voluntary disclosure is when you tell the ATO about an error or omission in something you have already lodged, before they identify it independently. This might be undisclosed income, an incorrect deduction, or a shortfall in GST reported on a past BAS.

The ATO does not require you to admit fault when you make a disclosure. You are not confessing to wrongdoing. You are correcting the record, and the ATO treats that correction very differently from an error they uncover on their own.

Why Timing Is the Most Important Factor

This is the part that changes the entire outcome, so it is worth understanding properly.

The ATO applies significant penalty reductions when you disclose before you are notified of a review or audit. Making an early disclosure, before any ATO contact at all, generally earns the greatest reduction available. An acknowledged voluntary disclosure made during the risk review stage of a compliance activity can still reduce penalties, though by a smaller amount than an unprompted disclosure made beforehand.

Here is how the reduction typically breaks down:

• Before ATO notification: the base penalty can be reduced by 80 percent. Where the shortfall amount is under $1,000, the penalty can be reduced to nil.
• After ATO notification of a review or audit: a disclosure at this stage still reduces the base penalty, generally by 20%, a smaller reduction than an early disclosure.
• No disclosure at all: if the ATO identifies the error independently, none of these reductions apply, and the full penalty and interest exposure remains.

One thing that does not change regardless of timing: the Shortfall Interest Charge on any outstanding tax still accrues. Voluntary disclosure reduces the administrative penalty, not necessarily the interest, though remission of the interest charge can be requested separately.

How to Make a Voluntary Disclosure

The correct method depends on whether the ATO has already notified you of a review or audit for that specific period.

1. Check your position. Confirm whether the ATO has contacted you about a review or audit covering the period in question. This determines which disclosure pathway applies to you.
2. Gather your facts. Identify exactly what was wrong, the correct figures, and the supporting documents behind the correction. A disclosure needs to provide all the necessary facts and circumstances for the ATO to properly assess it.
3. Choose the right channel. If the ATO has not yet notified you, you can generally make the disclosure by amending your tax information through ATO online services, or through the mail message function if you use Online services for business.
4. Use a registered tax agent if applicable. A tax agent can make the disclosure on your behalf by requesting an amendment through an ATO-approved electronic channel, provided their agent number is linked to your records.
5. If you are already under review or audit, you can no longer use the standard amendment channels. Instead, you disclose directly to the tax officer handling your case, either using the specific voluntary disclosure form, over the phone, or face to face.
6. Wait for the ATO’s assessment. The ATO will review the disclosure and determine what penalty, if any, applies based on the timing and completeness of what you have provided.

What Happens After You Disclose

Once the ATO receives your disclosure, they assess it and determine the outcome. You may need to provide further information before the ATO finalises any adjustment, since no change occurs without proper examination of what you have submitted.

If a shortfall results from your disclosure, meaning you owe more tax or are entitled to fewer credits than originally reported, interest may apply on that shortfall. You can ask the ATO to reduce this interest charge, but you will need to make that request and provide supporting information rather than assuming it applies automatically.

Voluntary disclosure does not shield you from consequences in cases involving genuine fraud or deliberate evasion. For the vast majority of taxpayers, though, an error or omission is a compliance issue, not a criminal one, and the ATO’s framework is designed with that distinction in mind.

Why Waiting Makes the Problem Bigger

The temptation to leave a known error alone usually comes from hoping it goes unnoticed. That hope carries a real cost.

While the issue sits unresolved, Shortfall Interest Charges keep accumulating on any outstanding tax. The longer you wait, the larger that number grows, and your options for reducing the eventual penalty narrow the closer the ATO gets to finding it independently.

If you have identified something that needs correcting in a previous return, the strongest position is always to disclose it yourself. This applies whether the fix is a straightforward amendment to a recent return or a more involved voluntary disclosure covering undisclosed income or GST.

Getting Help With a Voluntary Disclosure

Working out whether something needs a simple amendment or a formal voluntary disclosure is not always obvious, and getting it wrong can affect how much penalty relief you are entitled to.

At ABBS Tax, our team works through this distinction with clients across Brisbane and Logan before anything gets lodged with the ATO. Because your bookkeeping and tax records are handled by the same team, we can usually trace exactly where an error came from and how far back it goes, which makes the disclosure itself more accurate and complete.

Need help with a voluntary disclosure to the ATO? ABBS Tax handles tax amendments and ATO compliance matters for clients across Brisbane and Logan. Get in touch before you lodge, not after.

This article is general information only, not tax advice. Speak to a tax professional about your specific situation.