Code of settlement practice

Circumstances where it would be generally inappropriate to settle

25. Circumstances where it would be generally inappropriate to settle include where:

• the outcome of the settlement would be contrary to an articulated policy reflected in the law
• the matter is subject to escalation to settle the precedential ATO view
• the matter is clear-cut or there is a clearly established and articulated precedential ATO view on the issue, and there are no special circumstances such as those described in paragraph 26
• the settlement would involve inconsistency of treatment for taxpayers in comparable circumstances
• it is in the public interest to have judicial clarification of the issue and the case is suitable for this purpose - in such cases, it may be appropriate to fund the litigation under the test case funding program
• litigation of the matter through the courts could have a significant flow-on compliance effect and the case is suitable for this purpose
• a similar matter is being litigated and awaiting outcome
• the taxpayer's case is poor and unlikely to be pursued through the Administrative Appeal Tribunal (AAT) or court. Care is necessary to ensure the settlement practice does not encourage frivolous objections and appeals
• inability to pay a tax debt as it falls due has been deliberately created and it would be inappropriate to consider settlement without first escalating the matter (see paragraph 35).

Sections within Part 2: Factors affecting settlement

• Meaning of settlement
• Disputes as to quantum
• Borderline questions of law and fact
• Legal basis for settlement
• The good management rule
• When settlement discussions may occur
• Circumstances where it would be generally inappropriate to settle
• Circumstances where it may be appropriate to settle
• Where unrelated issues are involved: global settlements
• Relevance of ability to pay
• Alternative dispute resolution, including mediation
• Settlements and prosecutions
• Treatment of penalties and interest charges