ATO settlements to come under scrutiny | KPMG | GLOBAL

ATO settlements to come under scrutiny

ATO settlements to come under scrutiny

Sarah Dunn and Farzana Ahmed discuss the appointment of three former Federal Court judges to review out of court settlements reached between taxpayers and the ATO.

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Settlements recently reached with the Australian Taxation Office (ATO) may come under scrutiny following announcement of the ATO’s appointment of three former Federal Court Judges to review out of court settlements reached between taxpayers and the ATO.

Called the ‘independent assurance of settlements program’, the ATO has stated it expects about 10 settlements to be reviewed in the first half of 2017, but has not identified which matters are to be reviewed.

The ATO disclosed in its 2015-2016 Annual Report the intent of the program is to provide the community with assurance that settlements were undertaken fairly, reasonably and in line with legal principles. The ATO noted that two of their largest settlements were reviewed in the course of developing the program and found to be fair and reasonable.

Former Federal Court Judges Garry Downes, Kevin Lindgren and Brian Tamberlin have been announced as the first Panel Members for the program. Garry Downes was a Federal Court Judge and President of the Administrative Appeals Tribunal from 2002 to 2012 and worked with the ATO to design the program. Kevin Linden was a Judge of the Federal Court from 1995 to 2010 and a member of a number of Panels including the Tax Panel and has mediated a number of revenue disputes. Brian Timberline was a Federal Court Judge from 1994 to 2009, following which he became Deputy President of the Administrative Appeals Tribunal.

ATO settlements have come under increased focus in recent years due to concerns raised by some questioning the potential tax revenue being forgone. However, while there was a 31 percent increase in number of matters settled from 2014-15 to 2015-16, there was a decrease in the number of settlements with large businesses, from 81 to 27. This reduction is at least in part a reflection of a backlog of older disputes having been resolved.

However, while the Commissioner has emphasised that the ATO is ready and willing to pursue matters all the way to court if necessary, the ATO is still predicting further settlements, including as a result of the Multinational Anti Avoidance Law. It has also confirmed that its principal focus in terms of litigation remains the “most strategic cases”.

© 2017 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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