Code of settlement practice

Part 1: Purpose and scope of this Code

Purpose and scope

1. This Code provides guidelines on the settlement of taxation disputes in relation to all taxpayers. It provides guidance as to the situations in which settlement could be considered and outlines the processes which should be followed.
2. A settlement involves an agreement or arrangement between parties to finalise their matters in dispute in situations where it is in the best interests of the Commonwealth to do so¹. In the case of taxation disputes, special considerations arise because, on one hand, the Commissioner's basic duty is to administer taxation law through assessing and collecting taxes and determining entitlements. However, on the other hand, the Commissioner also has an obligation to administer the taxation system in an efficient and effective way. Settlements usually involve the need to balance competing considerations and call for the application of discretion and good sense.
3. This Code is accordingly designed to ensure that:

• settlements of taxation disputes occur only in appropriate cases and in accordance with established practices that provide the necessary checks and balances
• there is transparency and accountability in the settlement process.

4. The Code has been written mainly with income tax in mind, but the principles are applicable to all laws administered by the Commissioner.
5. Some taxation disputes involve issues that are common to groups of taxpayers who are in similar circumstances (see for example, paragraph 21). In these widely-based disputes, there are additional factors that must be taken into account. Supplementary guidelines on the settlement of these disputes are contained in PS LA 2007/6. Those guidelines should be read in conjunction with this Code.

Sections within Part 1: Purpose and scope of this Code

• Ensuring accountability and transparency
• Overview of the Code
• Date of effect