What is the primary difference between income tax returns and tax assessments?

The statement that tax returns are submitted by taxpayers while assessments are made by the ATO accurately captures the primary distinction between the two concepts.

Tax returns are documents that individuals or businesses file with the tax authority (in this case, the ATO) to report their income, expenses, and other relevant financial information. This process is initiated by the taxpayer, who is responsible for correctly completing and submitting the return based on their financial activities for the year.

On the other hand, tax assessments are determinations issued by the tax authority that outline the tax amount owed based on the details provided in the submitted returns, along with any adjustments or corrections made by the ATO following their review. The assessment is considered the ATO's official calculation of tax liability, and it serves as a final decision on the taxpayer's obligations for that period, unless it is appealed or amended.

This distinction is crucial, as it defines the roles of taxpayers and the tax authority in the tax process. The other options misrepresent either the nature of tax returns and assessments or how they are handled by the respective parties involved. For example, tax returns being described as estimates overlooks the fact that they are formal documents required to reflect accurate financial information.