If offices find that there are discrepancies in the year being examined then a full-scale tax investigation may be carried out. The overall situation will determine any action to be taken. If a full investigation is commenced then past years may be looked at in detail. The investigation is generally limited to 3 years unless fraud is suspected. No one said you were.
Most taxpayers are honest and pay their dues.
Tax returns to be examined are chosen in a number of ways and they usually have nothing to do with any suspicion by the Tax Office that you have been less than honest. This is quite natural. How your return is selected Checks are made on tax return contents including tax file numbers, income, claims, rebates etc. Returns are selected through information from the computer by random checks on different classes or groups and through set examination programs by the Tax Office. Computer checks are made on large organisations such as banks and building societies to ensure interest and dividend income has been declared by taxpayers.