The current news reports re the powers of the Australian Tax Office (ATO) and the errors that they make, reminded me of my own experience some years ago...
It was 2002 and I received a notification from the ATO informing me that in my 2000 personal tax return I had missed declaring some Australian bank interest. Now this turned out to be quite correct, and in my defense, there was a lot going in with the UK at that time for me, so obviously I had overlooked it. The outstanding tax was $250, however the letter said, I would be receiving a revised assessment in the next few days.
The assessment duly arrived – for $2500! It stated that this had been calculated by adding the General Interest charge of 11% p.a. compounded daily! Now I did a few calculations but, even allowing for 2 years, I could not see how $250 could become $2500.
So I decided to ring the ATO. When I explained the reasons for my call, they asked the date of the assessment and then proceeded to tell me that I should ring back the next day since it was not on their computers! (Hello? – you sent me the assessment!!).
After counting to 10, I rang them again the next day and was put through to the ‘General Interest Charge Department’.
There was a long pause following an explanation of my query…then I was told I had to write in and appeal.
This is where they have you over a barrel – the general interest charge is continuing to clock up at 11% p.a. compounding daily. Therefore, I decided the only course of action was to send them a cheque for the full amount per the assessment, whilst appealing. In my letter, appealing the assessment, I did however request that if I was correct and there had been a miscalculation, could I please leave the money with them for 2 years and could they then send me a cheque for $25,000.
My appeal was successful.
I hope this real story amuses - I was one of the lucky ones able to dispute the assessment - and be able to pay the $2500 which they demanded in error.