• Resolving disputes

    We are focused on early engagement with taxpayers to reduce the likelihood of a dispute. If a dispute does arise, we aim to resolve it as quickly as possible as this lowers costs for all.

    Figure 16: GST disputes in 2014–15

    This bubble diagram shows that of the 16,340 adjustments arising from an audit, 1,214 (or 7.4%) objections were received, 106 (or 0.6%) cases were referred to courts or tribunals and 23 (or 0.1%) cases proceeded to decision.

    Objections

    Building on strategies to manage and limit the number of objections, we:

    • continued to improve our communication channels (face-to-face meetings, SMS technology) to help taxpayers understand audit outcomes and to address the taxpayer’s concerns before formalising decisions
    • engaged experts early in the life of the case to resolve points of disagreement
    • improved the average time taken to complete a GST objection down to 68 days from 71 days in 2013–14
    • encouraged the use of independent review and resolution mechanisms.

    On 25 May 2015, in response to recommendations from the House of Representatives Standing Committee on Tax and Revenue’s inquiry into tax disputes, we created a new business line, Review and Dispute Resolution (RDR). This brings together all ATO officers involved in reviews and resolving objections to improve independence in these cases and provide opportunities to make the objections process more efficient and easier for those involved.

    During the year, our independent review process was extended to GST large market clients (with more than $250 million turnover) allowing them to request an independent review of audit position papers. At 30 June 2015, three independent reviews had been completed with two supportive of our position, and the other supportive of the taxpayer’s position.

    Our dispute resolution methodologies to resolve disagreements are starting to see results with the number of audit cases (with an adjustment) that progressed to objection decreased from 8.57% in 2013–14 to 7.43% this year. There were also more objections resolved with a settlement option than in previous years, with 20 objection cases settled in 2014–15. We also saw fewer objections disputed at litigation with only 7.7% of finalised objections subject to further dispute, compared to 10.3% in 2013–14.

    We received 10% fewer GST objection cases this year at 1,214 compared to 1,353 received last year.

    This year we reviewed 90 objection cases relating to refund integrity. This identified a large proportion of the objections allowed ‘(in part’ or ‘in full’) relating to cases where assessments were issued to taxpayers who provided no or insufficient documentation at the audit stage (60% of the 90 cases). Had the required information been provided at the audit stage, these cases may not have progressed to objection.

    GST objections total outcomes

    *Results for 2012–13 and 2013–14 have been amended from previously published figures as we identified an error in our reporting methodology.

    Table 15: GST objections – received and finalised

    Objections

    Received

    Finalised

    2014–15

    1,214

    1,381

    2013–14*

    1,353

    1,388

    2012–13*

    1,893

    2,375

    2011–12

    2,885

    2,655

    2010–11

    1,965

    1,558

    Figure 17: GST objections – received and finalised

    Decorative graph: provides a visual representation of GST objections received and finalised over the past five financial years – figures already provided in Table 15.

    Table 16: GST objections received – non-compliant behaviour type

     

    2013–14*

    2014–15

     

    Cases

    %

    Cases

    %

    Refund integrity (pre issue)

    488

    36

    409

    34

    Refund integrity (post issue)

    175

    13

    204

    17

    Cash economy

    163

    12

    246

    20

    Property

    245

    18

    140

    12

    Serious evasion

    55

    4

    18

    1

    Other

    227

    17

    197

    16

    Total

    1,353

    100

    1,214

    100

    Figure 18: GST objections received – non-compliant behaviour type

    Decorative graph: provides a visual representation of GST objections received by non-compliant behaviour type over the past two financial years – figures already provided in Table 16.

    Table 17: GST finalised objections – market

     

    2012–13*

    2013–14*

    2014–15

    Micro

    2,098

    1,159

    1,070

    Small to medium enterprises

    182

    192

    256

    Large

    43

    10

    31

    Government

    14

    18

    6

    Not-for-profit

    26

    6

    15

    Unknown

    12

    3

    3

    Total

    2,375

    1,388

    1,381

    Figure 19: GST finalised objections – market

    Decorative graph: Figure that represents the GST finalised objections by market segment - data provided in Table 17.

    Table 18: GST finalised objections – outcomes

     

    2012–13*

    2013–14*

    2014–15

     

     

     

    Cases

    %

    Cases

    %

    Allowed in full

    895

    38

    337

    24

    364

    26

    Allowed in part

    466

    20

    373

    27

    449

    33

    Disallowed

    590

    25

    331

    24

    308

    22

    Withdrawn settled

    16

    1

    4

    <1

    20

    1

    Invalid/Withdrawn

    408

    17

    343

    25

    240

    18

    Total

    2,375

    100

    1,388

    100

    1,381

    100

    Figure 20: GST finalised objections – outcomes

    Decorative graph: provides a visual representation of GST finalised objections - outcomes over the past three financial years – figures already provided in Table 18.

    Table 19: GST objections – amounts in dispute

     

    2012–13*

    2013–14*

    2014–15

     

    Tax $m

    Penalty $m

    Tax $m

    Penalty $m

    Tax $m

    Penalty $m

    Original audit liabilities

    265

    89

    163

    77

    333

    110

    Amount in dispute

    225

    86

    137

    66

    299

    104

    Amount allowed

    56

    22

    49

    27

    54

    12

    Net audit liabilities

    209

    67

    114

    51

    279

    98

    Amount allowed %

    21%

    25%

    30%

    35%

    16%

    11%

    Figure 21: Original audit liabilities allowed

    Graph that represents the GST objections amount allowed as a percentage for both 2013–14 (32%) and 2014–15 (15%) – this is taken from the figures provided in Table 19.

    Cash economy objections

    Table 20: Cash economy objections – outcomes

     

    2012–13*

    2013–14*

    2014–15

     

    Cases

    %

    Cases

    %

    Cases

    %

    Allowed in full

    29

    18

    14

    10

    37

    15

    Allowed in part

    60

    37

    68

    51

    116

    47

    Disallowed

    46

    29

    30

    22

    53

    21

    Invalid/Withdrawn

    26

    16

    23

    17

    43

    17

    Total

    161

    100

    135

    100

    249

    100

    Figure 22: Cash economy objections – outcomes

    Decorative graph: Figure that represents the GST cash economy objection outcomes data provided in Table 20 in percentage form.

    Table 21: Cash economy – amounts in dispute

     

    2012–13*

    2013–14*

    2014–15

     

    Tax $m

    Penalty $m

    Tax $m

    Penalty $m

    Tax $m

    Penalty $m

    Original audit liabilities

    6.3

    3.7

    3.5

    2.4

    4.4

    3.3

    Amount in dispute

    4.5

    3.1

    2.3

    2.2

    2.6

    3.0

    Amount allowed

    1.4

    1.0

    0.6

    0.7

    0.8

    1.3

    Net audit liabilities

    4.9

    2.7

    2.9

    1.7

    3.6

    2.0

    Amount allowed %

    22%

    27%

    17%

    29%

    18%

    39%

    Figure 23: Cash economy – original audit liability allowed

    Decorative graph: Figure that visually represents cash economy amounts in dispute data provided in Table 21.

    Property objections

    Table 22: Property – objections

    Issues

    2014–15

     

    Cases

    %

    Disengaged property developers

    79

    50

    Real property issues

    45

    29

    Other property issues

    3

    2

    Incorrect reporting

    29

    19

    Total

    156

    100

    Figure 24: Property – objections

    Decorative graph: Figure that visually represents property objections 2014–15 data provided in Table 22.

    Table 23: Property – amounts in dispute

     

    2012–13*

    2013–14*

    2014–15

     

    Tax $m

    Penalty $m

    Tax $m

    Penalty $m

    Tax $m

    Penalty $m

    Original audit liabilities

    52.3

    21.7

    53.6

    28.3

    49.9

    15

    Amount in dispute

    43

    20.8

    36.8

    27

    36

    14.1

    Amount allowed

    15.5

    7.5

    11

    10

    9.6

    5.8

    Net audit liabilities

    36.8

    14.2

    42.6

    18.3

    40.3

    9.2

    Amount allowed %

    30%

    35%

    21%

    35%

    19%

    39%

    Figure 25: Property – original audit liability allowed

    Graph that represents the property objections amount allowed as a percentage for both 2013–14 (21%) and 2014–15 (19%) – this is taken from the figures provided in Table 23.

      Last modified: 14 Dec 2015QC 47462