Code of settlement practice

Attachment B - Model deed of settlement

Where a settlement is to be evidenced by a deed of settlement, this model deed should be used as a basis. However, officers should consider whether any appropriate adjustments should be made to the model deed according to the circumstance of each case. The model deed relates to an income tax dispute and would need to be amended to suit other taxes. Reference should also be had to the checklist of terms at paragraph 82 for further explanations of terms used.

MODEL DEED OF SETTLEMENT
BETWEEN

<taxpayer>

AND
THE COMMISSIONER OF TAXATION
OF THE COMMONWEALTH OF AUSTRALIA

TERMS OF SETTLEMENT

THIS DEED is made the ________________ day of _________________, 20XX.

BETWEEN: <taxpayer's full name and address> ('the taxpayer')

AND

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA ('the Commissioner') of 26 Narellan St, Canberra ACT 2601

Context

A.    The Commissioner and the taxpayer are in dispute as to <summary of the dispute, for example, alleged income tax liability of the taxpayer for the year(s) of income ended 30 June 20XX>.

B.    In particular, the Commissioner and the taxpayer are in dispute as to:

1. <particulars>; for example, the tax deductibility of certain amounts said to have been incurred in respect of <description>
2. <particulars>; for example, the assessability as to income tax of certain amounts said to have been derived in respect of <description>.

C.    The parties remain in dispute as to the alleged taxation liability or entitlement of <taxpayer>.

D.    The parties nonetheless wish to settle their dispute on the following terms.

Operative Provisions

In consideration of the mutual promises contained in this document, the parties to this deed agree as follows:

1. Definitions and Interpretation

1.1 In this document:

'Act' means the Income Tax Assessment Act 1936 (as amended) and the Income Tax Assessment Act 1997 (as amended) and includes regulations made pursuant to the Act, and any related legislation.

'Commissioner' means the Commissioner of Taxation of the Commonwealth of Australia and as required, his successors or assigns and any delegate or authorised representative acting on his behalf.

'relevant year(s)' means the financial year(s) ended 30 June 20XX.

'party' or 'parties' means <taxpayer> and/or The Commissioner of Taxation of the Commonwealth of Australia.

'person' means any natural person and includes a firm, corporation, body corporate, unincorporated association or any governmental authority.

1.2 In this document, unless the contrary intention appears:

1.2.1 a reference to this document means this deed, and references to clauses and schedules are references to clauses and schedules of this deed

1.2.2 any word, term or expression for which a particular or special meaning has been attributed or ascribed by the Act, shall be given that particular or special meaning in this deed

1.2.3 singular includes the plural and vice versa

1.2.4 a reference to any one gender includes each other gender (as the case may require)

1.2.5 a reference to a person includes a reference to that person's executors, administrators, legal personal representatives, successors and permitted assigns

1.2.6 an agreement on the part of, or in favour of, two or more persons binds them or any one of them jointly and severally.

1.3 All headings in this document have been inserted for the purpose of ease of reference only. They do not affect the meaning or interpretation of this deed.

2. Obligations of the Commissioner

2.1 The Commissioner will do the following in the order in which they appear below:

2.1.1 issue amended assessment for the year ended 30 June 20XX to <taxpayer> by:

• reducing/increasing the income in respect of <the issue> from $ ___ to $ ___
• - increasing/reducing the deduction allowable in respect of <the issue> from $ ___ to $ ___
• - increasing/reducing an amount of credits or tax offsets in respect to <the issue> from $ ___ to $ ___

2.1.2 issue etc for specific next year [etc]

2.1.3 charge culpability/tax shortfall penalties in respect of the income year(s) ended 30 June 20XX, as particularised in schedule 1

2.1.4 charge general interest charge (GIC), shortfall interest charge (SIC), interest, late payment penalty, etc in relation to the amended assessment(s) referred to in clause 2.1.1 [etc] above, as particularised in schedule 1.

2.2 Provided that the amended tax liabilities as set out in schedule 1 are paid by the due dates in accordance with clause 3.3, the parties agree that the Commissioner will not impose any further GIC or SIC or interest, etc for late payment, other than that referred to in clause 2.1.4.

2.3 The Commissioner agrees to issue amended assessment referred to in clause 2.1 by no later than <date>.

3. Obligations of the taxpayer

3.1 The taxpayer:

3.1.1 will not object to or request an amendment or review of assessment(s) referred to in clause 2.1.1 [etc] above if raised on the terms set out in this deed

3.1.2 will not appeal against the Commissioner's decision to any relevant objection

3.1.3 will pay to the Commissioner the amount of $ ___ being the additional tax, penalties, GIC or SIC resulting from the amended assessment(s) for the year(s) ended 30 June 20XX calculated pursuant to this deed, no later than <date>

3.1.4 will not seek any review of the issues agreed in this Agreement, or of related decisions, under the Administrative Decisions Judicial Review Act 1977 or administrative law generally (this does not include review by the Ombudsman)

3.1.5 will not seek disclosure under the Freedom of Information Act 1982 of ATO, documents in relation to issues or decisions relevant to the settlement recorded by this Agreement

3.1.6 makes no admissions as to liability not withstanding any provisions in this Agreement.

4. Taxpayer's warranty and acknowledgement

4.1 The taxpayer warrants that to the best of its knowledge and belief it has made a true disclosure of all relevant and material facts to the Commissioner which relate to the issue, prior to entering into this deed.

4.2 The taxpayer acknowledges that, if there has not been a full and true disclosure of all relevant facts to the Commissioner as required by clause 4.1, the Commissioner may in his absolute discretion take whatever further action he considers appropriate, including, without limitation:

4.2.1 electing that this deed be terminated

4.2.2 electing that this deed is void (as if it had never been executed) as against all parties to this deed (except insofar as the warranties or indemnities referred to in this deed are concerned)

4.2.3 rescinding, reversing or amending any of the things referred to in clause 2.

4.3 The taxpayer acknowledges that, if it defaults in performing its obligations under clause 3.1 (by failing to pay the assessment issued in accordance with clause 2.1.1) the Commissioner may take whatever action is necessary to recover the full amount outstanding, including taking action to:

4.3.1 obtain judgment against the taxpayer

4.3.2 cause a trustee in bankruptcy to be appointed to administer the estate of the taxpayer [if taxpayer is an individual]

4.3.3 cause the taxpayer to be wound-up [if taxpayer is a corporation].

5. Authority to sign

5.1 ATO authority

This agreement is to be signed by either a delegate or authorised officer of the ATO, as follows:

5.1.1 [If signed by a delegate]
The person signing this deed, a delegate of the Commissioner of Taxation, who has the power to make, enter into and execute this Agreement in his capacity as a delegate of the Commissioner

5.1.2 [If signed by an authorised officer]
The person signing this deed on behalf of the Commissioner, authorised by a delegate of the Commissioner, to make, enter into and execute this deed on the Commissioner's behalf

5.1.3 It is acknowledged by the parties to this deed that the authorised officer shall have no personal liability as a result of being the authorised signatory of the Commissioner to sign this deed, and it is further acknowledged that they are the agent of the Commissioner acting within the scope of their authority.

6. General

6.1 The parties mutually covenant and agree that they will each do all the acts and things and execute all the deeds and documents as shall, from time to time, be reasonably required for the purpose of, and to give effect to, this deed.

6.2 This deed is confidential to the parties and shall not be disclosed by any of the parties, except:

6.2.1 as is required or permitted by any law

6.2.2 by the taxpayer to their auditors, bankers, tax advisers or legal advisers

6.2.3 by the Commissioner to his legal advisers.

6.3 This deed constitutes the entire agreement and undertaking between the parties in relation to the subject matter, and supersedes any previous deeds, agreements, arrangements, and undertakings between them.

6.4 Provided that the amended tax liabilities as set out in schedule 1 are paid by the dates specified in accordance with clause 3.3, the parties agree that this deed constitutes a complete release and extinguishment of <taxpayer's> liability with regard to the amended assessment(s) and related matters.

6.5 This deed shall be construed and governed in accordance with the laws in force in [State or Territory] and shall take effect between the parties from the date this deed is signed or executed.

6.6 The schedule to this deed sets out the amendments to tax liabilities of the <taxpayer> pursuant to the terms set out in this deed and as such forms part of the agreement set out by this deed.

6.7 All parties acknowledge that this deed is not to be considered a general precedent but applies only to the parties mentioned, and only on the merits of the case and for the years covered by the settlement.

7. Default clause

7.1 Any party to this deed who becomes aware of a breach of any of the terms of the settlement contained herein, may serve a written notice on the offending party specifying the breach and requiring that it be rectified.

7.2 Any defaulting party to this deed who has received written notification under clause 7.1 has fourteen (14) days to rectify the breach.

7.3 If the defaulting party fails to rectify the Breach within the time required by clause 7.2, the non-defaulting party may, without further notice to the defaulting party, take whatever action is necessary (including injunctive or other relief) to require the defaulting party to rectify the breach.

8. Notices

8.1 Any notice, request or other communication to be given or served pursuant to this deed shall be in writing and dealt with as follows:

8.1.1 if given by the taxpayers (or any of them) to the Commissioner - addressed and forwarded to the Commissioner for the attention of <name> at the address set out below at the commencement of this deed or as otherwise notified by the Commissioner

8.1.2 if given by the Commissioner to the taxpayers (or any of them) - signed by the Commissioner and forwarded to the taxpayers (or any of them) at the address indicated at the commencement of this deed.

8.2 Any such notice, request or other communication shall be delivered by hand or sent by prepaid security post, facsimile or e-mail, to the address of the party to which it is sent.

8.3 Any notice, request or other communication will be deemed to be received:

8.3.1 if delivered personally, on the date of delivery

8.3.2 if sent by prepaid security post, upon the expiration of 2 business days after the date on which it was sent

8.3.3 if transmitted electronically, upon receipt by the sender of an acknowledgment that the communication has been properly transmitted to the recipient.

EXECUTED BY THE PARTIES AS A DEED

SIGNED, SEALED AND DELIVERED

[If executed by a company]

Executed by:
<company>
ACN <number>
in accordance with section 127 of the Corporations Act 2001
............................................................. Secretary/Director		............................................................ Director
........................................................... <print name>		............................................................ <print name>
in the presence of: ............................................................ <print name of witness>		in the presence of: ............................................................ <signature of witness>
on the ……… day of ………………….20XX …….. at …….……………………..……………………………….. ……………………………….…….…………………………..		on the ……… day of …………………. 20XX at …….………………….…….……………………… …………………………….……….……………………

[If executed by a taxpayer]

Executed by:
<taxpayer>
<full address>
in the presence of: ........................................................... <print name of witness>		in the presence of: ........................................................... <signature of witness>
on the ……… day of …………..……….20XX …. at …….………..…………......………………………….. ……………………………….……..…..…………………….		on the ……… day of …………………20XX at …….……………….….…….…………………… …………………………….…….…….……………….

[If signed by a delegate]
SIGNED by <name of delegate> a delegate of the Commissioner of Taxation in the presence of:		................................................... <signature of witness>
................................................... <print name of witness>
on the ……… day of ……………………... 20XX at …….………….…………………………………………..…… ……………………………….…….………………………………………….…………………………………………….…………

[If signed by authorised officer]
SIGNED for and on behalf of the Commissioner of Taxation by <name of authorised officer> as Authorised by <name of delegate> in the presence of:		................................................... Signature of witness
................................................... Print name of witness
on the ……… day of ……………………... 20XX at ……...………………………………………………………… ……………………………….…….……………………………………………………………………........……………………

This is the schedule 1 referred to in the deed dated <date> between <taxpayer> and THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Schedule 1

Amendments to the tax liability for the year ended 30 June 20XX
Adjustments*
Increase/Decrease	Taxable Income/net income
	Primary Tax Payable	$............................
	Tax Shortfall Penalty	$............................
	Tax Shortfall Interest/GIC/SIC calculated to <date>	$............................
	Additional Late Lodgment Penalty (if applicable) calculated to <date>	$............................
	Credits/Other
Total increase/decrease in Tax Liability			$............................

[Duplicate the above for each year of income].

*Items referred to in schedule 1 are provided as mere examples. Items included in the schedule will need to be tailored to suit each individual case.