The variance between LodgeiT's calculation and the ATO's assessment regarding income averaging could be due to differences in how income averaging rules were applied or interpreted. 

Here are some possible reasons for the discrepancy:

1. Income Averaging Rules:

  • LodgeiT may have calculated the additional amount based on income averaging rules that apply to specific types of income (e.g., primary production income or special professional income).
  • The ATO might have excluded this calculation if the taxpayer's income did not meet the criteria for income averaging or if there was an error in the prefill data.


2. Prefill Data Discrepancy:

  • The ATO's assessment relies on prefill data, which may differ from the data entered into LodgeiT. If the prefill data was incomplete or incorrect, it could lead to a variance.


3. Manual Adjustments:

  • LodgeiT calculations might include manual adjustments or assumptions that were not reflected in the ATO's assessment.


4. Taxpayer Eligibility:

  • Income averaging applies only to certain taxpayers (e.g., artists, authors, athletes, etc.). If the taxpayer does not qualify, the ATO would not include the additional amount in their assessment.


Next Steps

1. Verify Income Averaging Eligibility:

Confirm whether the taxpayer qualifies for income averaging under the ATO's rules. You can review the eligibility criteria here: ATO Income Averaging Rules.

2. Compare Prefill Data: Use LodgeiT's "Prefill" feature to compare the original data entered in the Individual Tax Return (ITR) with the ATO's Notice of Assessment (NoA). This will help identify any discrepancies in the data.

Outcome of Assessment

This image shows how to review the Outcome of Assessment and compare the variance between LodgeiT's estimate and the ATO's NoA.

3. Amend the Tax Return:

If the discrepancy is due to incorrect data or calculations, you can amend the tax return in LodgeiT and re-submit it to the ATO. Learn more about how to amend a tax form here: How to Amend a Tax Form.


Notes: The variance is likely due to differences in eligibility, prefill data, or manual adjustments. To resolve this, verify the taxpayer's eligibility for income averaging, compare the prefill data with the ATO's NoA, and amend the tax return if necessary. If further assistance is needed, consult the ATO or a tax professional.