Show download pdf controls
  • Independent Assurance of Settlements program

    We work with taxpayers to resolve disputes as early as possible. As part of good administration, we regard settlement as an important mechanism for resolving disputes.

    The Independent Assurance of Settlements (IAS) program, implemented in 2016, reviews and advises on our largest and most significant settlements.

    This is to provide the Australian community with confidence that our settlements and settlement processes are:

    • fair and reasonable
    • consistent with legal principles.

    To date, 36 settlements have been reviewed through the program.

    Settlements selected for review

    The program involves four former Federal Court judges who provide a view on whether the settlements are fair and reasonable. Settlements selected for review include those involving:

    • multi-national enterprises
    • those arising from Corporate Tax Avoidance Taskforce operations
    • income tax or indirect tax (GST, excise).

    The criteria for a settlement to be automatically selected for review are where:

    • the pre-settlement position is greater than $50 million
    • the settlement amount is greater than $20 million
    • the variance is greater than $20 million.

    Any other case considered significant (for example, potential reputational significance, media interest) will be approved for review by a deputy commissioner.

    During the 2017–18 year, the assurers reviewed 12 settlements and found that 11 provided a fair and reasonable outcome for the Australian community.

    In the one settlement where the assurer could not conclude that the settlement was fair and reasonable, the assurer noted the settlement was ‘a difficult case’, involving unique circumstances.  In this settlement, the ATO does not foresee any negative impact on the future compliance of either the taxpayer or the broader community.

    This is an important topic in light of the ATO’s strong focus on willing participation by taxpayers in Australia’s taxation system and the need to address future compliance rather than just looking at previous non-compliance.  

    Assurer feedback on all reviewed cases provides important learnings, which we apply to improve how we conduct settlements.

    Australian National Audit Office report findings

    In the 2017 report The Australian Taxation Office's Use of SettlementsExternal LinkFootnote1 by the Australian National Audit Office (ANAO), the IAS program was found to be contributing to the ATO’s improvement of its enterprise approach to settlements, with the ATO having the highest level of reporting around settlements compared to other national revenue authorities internationally.

    The findings of the ANAO report also indicate that the ATO’s use of settlements is effective and positive. It found the IAS program gave valuable assurance that settlements entered into with large businesses and multinational enterprises resulted in fair and reasonable outcomes for the Australian community.

    The ANAO also noted in their review that the ATO had the highest level of transparency and public reporting around settlements when compared to other national revenue authorities.

    See also:

    Footnote 1
    The Australian Taxation Office’s Use of Settlements <https://www.anao.gov.au/work/performance-audit/australian-taxation-office-use-settlements>

    Return to footnote 1 referrer

      Last modified: 02 Oct 2019QC 57334