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14.2. Type of Assessment

The type of assessment maintained in Australia is the self-assessment system, according to which the initial responsibility for the determination of tax liability and the amount of tax payable lies with the taxpayer. Consequently, on submission by the taxpayer of a tax return, the Commissioner is taken to have made, on the date of submission, an assessment of the taxpayer’s taxable or net income, and of the tax payable on such income as specified in the return, and to have served a notice of assessment on the taxpayer at the same time. The role of the tax office then becomes one of verifying, through the audit process, whether the assessment made by the taxpayer is accurate and, if not, taking appropriate measures to ensure that it is.

Where the taxpayer fails to submit a return or the Commissioner is not satisfied with the return submitted, the Commissioner is entitled to make an assessment based on his own judgement of what the taxable amount should be.