A taxpayer’s representative contacted our office after the ATO issued formal information gathering notices (Section 353-10 of Schedule 1 to the Taxation Administration Act 1953) during an audit. They considered the ATO had moved too quickly to a formal approach and asked that the notices be withdrawn in favour of informal requests, along with an opportunity to meet and better understand the ATO’s concerns.

We investigated by independently reviewing ATO records, seeking further information from the ATO, and testing whether the ATO’s stated rationale was supported by evidence. The ATO explained that it had resorted to formal notices after earlier informal requests were repeatedly delayed, affecting the timeliness and progression of the audit. We asked the ATO to evidence this position and considered examples where responses had taken extended periods.

Having regard to the reasons provided — and the supporting timelines — we formed the view that the decision to use a formal notice was not unreasonable in the circumstances.

This case is a useful reminder that while formal powers should be exercised carefully, they can be an appropriate tool where repeated delays are materially affecting administration.

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Zach approached our office after experiencing what he believed was an unfair and discouraging process during the ATO’s audit and subsequent objection regarding his 2024 self-education expense claim. Across several discussions, he outlined four concerns:

• whether he had been afforded procedural fairness in the objection review
• whether TR 2024/3 had been applied correctly, particularly regarding the vocational relevance of his studies
• whether comments made during the process could be viewed as attempts to deter him from pursuing an objection
• whether his experience reflected a broader imbalance in how individuals and larger entities are scrutinised.

We undertook a detailed investigation, focusing on the appropriateness of the ATO’s objection handling and the technical application of TR 2024/3. This included reviewing the steps taken by the ATO, assessing how vocational alignment had been considered, and seeking further clarification where processes or reasoning appeared unclear.

Our engagement prompted the ATO to initiate an internal review of its objection decision, providing a fresh assessment of the deductibility of the self-education expenses in line with the ruling.

Following its review, the ATO concluded that Zach’s income earning activities clearly relied on specialised skills and knowledge, and that the studies demonstrably maintained and improved those capabilities. Under Principle 1 of TR 2024/3, this met the primary test for deductibility.

The ATO accordingly remade its decision to allow the self education expense and appointed a case officer to guide Zach through the final steps.