Begin with jurisdiction, issue and time
Before drafting a reply, identify the provision under which the communication is issued, the assessment year or tax period involved, the exact information sought and the response deadline.
A notice should be read as a procedural document. The first review must separate what is alleged, what is merely requested and what has already been placed on record.
Create a fact chronology
A concise chronology prevents the response from becoming a collection of disconnected documents. It should cover the transaction, accounting treatment, return position, earlier communications and later developments.
- Date and nature of each relevant transaction
- Document or ledger supporting the fact
- Tax treatment adopted and where it appears in the return
- Any difference, correction or reconciliation required
- Earlier submission made on the same issue
Reconcile the evidence
Return data, books, bank records, third-party information and supporting agreements should be reconciled before a legal position is finalised. If a difference exists, explain it directly instead of allowing the authority to discover it without context.
The annexures should be indexed and referred to from the relevant paragraph. This makes the submission easier to examine and reduces the risk that an important record is overlooked.
Draft for the next stage as well
A good response states the facts, the taxpayer’s position, the supporting law and the relief requested. It should remain consistent if the matter later moves to another authority or an appellate stage.
Deadlines, jurisdiction and legal remedies depend on the specific communication and current law. A notice should therefore be reviewed promptly by the appropriate professional.