Code of settlement practice

The Code of settlement practice or the 'Code' provides guidance for ATO staff on:

• the settlement of taxation disputes in relation to all taxpayers
• where settlement could be considered.

It also outlines the processes that should be followed.

The Code balances the need for accountability and transparency of decision making with the requirements under the law to maintain the privacy of taxpayers' information. It is designed to provide assurance about the appropriateness of settlement decisions.

Background

Settling disputed matters is consistent with good management of the tax system, overall fairness and best use of ATO and other community resources. This has become known as 'the good management rule', which has been endorsed by the courts.

Settlement guidelines were initially developed in consultation with taxpayer, professional and industry groups. They were first introduced in February 1991, then revised and retitled the Code of settlement practice in September 1999.

Two practice statements have also been issued in conjunction with the Code:

• Law Administration Practice Statement PS LA 2007/5 Settlements prescribes mandatory use of the Code by all ATO staff in the settlement of taxation disputes
• Law Administration Practice Statement PS LA 2007/6 Guidelines for settlement of widely-based tax disputes sets out practical guidelines for the settlement of widely-based tax disputes.