Although the Federal Court’s tax litigation workload has decreased, disputes with the Australian Taxation Office (ATO) have not necessarily experienced the same decline. Many are simply being resolved earlier in the tax dispute cycle. Recent data shows that although tax litigation is currently down, the number of settlements registered by the ATO is up. And more importantly, the amount collected by the ATO from settlements of tax disputes is at a record high.
There will always be a need for the courts to clarify the law in tax disputes.
The current shift in the way that the ATO is dealing with disputes, however, means proactive preparation will increase a taxpayer’s ability to impact and influence the outcome of the dispute without resort to litigation.
The majority of tax disputes are factual, making an early focus on robust facts and evidence critical to be able to position a taxpayer to resolve a dispute in its favour.
In our experience acting for and against the ATO in tax disputes, the most effective methods of resolving disputes early include:
Determining the most appropriate method for taxpayers to resolve disputes with the ATO is key. Insights and experience as to how the ATO considers and deals with disputes will assist in determining the most appropriate approach.