Code of settlement practice

Where unrelated issues are involved: global settlements

28. If the settlement involves more than one issue, regard must normally still be had to the legal and practical merits of each issue.
29. Accordingly, it is only in exceptional cases that negotiations should be entered into for a 'global' settlement. Global settlements typically involve a single settlement figure being arrived at in respect of a group of unrelated issues, without specific reference to a calculated outcome for each issue based on its merits.
30. There are several reasons why this type of settlement should only be considered as a last resort.

a. The scheme of the legislation is that tax should normally be collected in the year in which it is levied. The collection of tax referable to one issue should not generally be deferred until unrelated issues are reviewed; particularly where the amount involved is substantial. Indeed, delay can exacerbate collection difficulties, including cash flow problems for a taxpayer, and expose the taxpayer to higher interest charges.

b. The basic duty of the Commissioner in these circumstances is to undertake a genuine process of assessment and calculation of tax. This means, for example, that a process of raising every possible issue or argument to extend the range of bargaining points is totally unacceptable.

c. There should be no incentive for either party to trade off one unrelated issue against another, so that an arbitrary bargaining process takes the place of reasoned evaluation according to law.

31. However, the position is different where issues under review are related -such as, for example, a case where there is a common flow of funds or the same underlying transaction. It may be appropriate to consider settlement of these issues as a package. For example, after discussion about a number of issues, the ATO may decide to accept the taxpayer's view in respect of some issues and the taxpayer may agree not to pursue their right of objection in respect of other issues. These cases are to be treated as settlements.

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