8. Settlement deed
Settlements must be finalised by the parties signing a written agreement which sets out the terms of their agreement. The agreement must represent the final agreed position between the parties (including any payment or future obligations including methods and timing).
The form of the agreement that will be appropriate to evidence a particular settlement may vary. For example, in simpler matters, an exchange of correspondence or a simple agreement may be appropriate to evidence a settlement. A simple agreement may include an agreement made between the parties under sections 34D or 42C of the Administrative Appeals Tribunal Act 1975 (AAT Act).
Model deeds are available for use in preparing a settlement agreement. Input from the ATO legal officers should be sought if any significant changes to the standard clauses are anticipated.
Varying a settlement agreement
Settlements represent an agreement by both parties to a dispute to a mutually negotiated position, following a considered assessment by each party of the risks and potential benefits of continuing the dispute. For this reason, the ATO does not believe that settlements should be undone lightly or without good reason. However, the ATO agrees that, in the interests of fair and reasonable administration, some settlements can and should be varied (reopened) in the limited and exceptional circumstances outlined below.
Taxpayers may seek to reopen a settled case where the ATO subsequently changes its view of the law on which the settlement was based, in a way that would have achieved a better outcome for the taxpayer, subject to the following conditions:
- a settlement resolves only one matter in dispute (and not multiple issues such as 'global’ settlements)
- the taxpayer requests that the settlement be varied
- the timeframe for the relevant amendment period has not ended
- the settlement was concluded after 1 December 2009 (the public release of the Inspector General of Taxation Review into aspects of the ATO's settlement of active compliance activities).
Prior to reopening a settlement, ATO officers must seek advice from the ATO settlement policy team in Review and Dispute Resolution.