Resolving disputes

We are improving client satisfaction with the process, service and fairness in managing disputes, including independent reviews.

Given the large scale of the ATO's operations and interactions with taxpayers, only a very small proportion of ATO decisions are disputed. Disputes include formal objections and litigation cases.

We now better understand the drivers of taxpayers’ perceptions of fairness in disputes. This research has identified possible improvements in our processes as well as reshaping how we resolve disputes, by shifting to a more client-centred approach.

In particular, we have adopted an early engagement approach to reduce the time and effort required to get to the heart of issues, resolve disputes and agree on a way forward. This often involves contacting the client by phone and initiating a conversation. It also includes engaging experts earlier in the life of cases to resolve points of disagreement and facilitate settlement of disputes.

Our performance in managing objections by GST taxpayers is measured by the number and age of cases resolved and on hand and, just as importantly, by community perception of how fair we are in dealing with these cases.

Figure 14: GST disputes in 2015–16

Objections

We received 1,150 objections in 2015–16 and completed 1,355. The higher finalisation rate was due to the completion of a number of objections lodged in previous years relating to refund claims from motor vehicle dealers, referred to as Motor Vehicle Incentive payments.

Our perceptions of fairness surveys showed a steady trend of increased satisfaction in our resolution of objections, around the 60% benchmark. This measure acknowledges that taxpayer perceptions of how they have been treated directly affects their compliance. Satisfaction has increased over the last 12 months, regardless of the outcome. This reflects our increased client focus, including better communication and interaction, understanding client needs, and tailoring our responses more appropriately to resolve the dispute. Please refer to Schedule C for further information.

We received 5% fewer GST-related objection cases this year – 1,150 compared to 1,214 received last year.

As discussed in the case study, self-assessment for indirect taxes came into effect from 1 July 2012. Under this system, a four-year period of review applies once the Commissioner makes an assessment. We have noticed some businesses are trying to claim GST credits outside the time limit. Notifying us within the four-year limit, to effectively ‘stop the clock’, is no longer an option.

Settlements

We may settle a dispute where we consider it consistent with good management of the tax system. In doing this, we balance our responsibility to collect taxes with the need to administer the tax system sensibly, having regard to relevant factors such as the relative strength of the positions of both parties, the cost versus the benefits of continuing the dispute, and the impact on future compliance for the particular taxpayer and the broader community.

We settled 49 cases in 2015–16.

Figure 15: Stage at which settlement occurred during 2015–16

GST objections total outcomes

Figure 16: GST objections – received and finalised

Figure 17: GST objections received – non-compliant behaviour type

Figure 18: GST finalised objections – market

Figure 19: GST finalised objections – outcomes

Table 18: GST objections finalised – outcomes

Note:

• Around half of all cases where the Commissioner conceded ‘in part’ or ‘in full’, were due to provision of further information by the client. Incomplete records are still a major driver of unfavourable audit decisions.

Figure 20: GST objections – amount allowed

Table 19: GST objections – amounts in dispute