While the ATO does not settle disputes at any cost, the sensible use of settlements is part of our commitment to earlier and more effective dispute resolution.
In 2015–16, we settled 1,362 cases – almost one-third (31%) more than in the previous year. The increased number of settlements can be attributed entirely to settlements finalised as part of Project DO IT (Declare Overseas Income Today). In all, there were 676 settlements, or about 50% of the total number of cases we settled. Each of these settlements occurred at the earliest stages, with a focus on prevention to avoid unnecessary and ongoing disputes.
Consistent with our focus on earlier dispute resolution, we are settling cases earlier across all market segments. In 2015–16, 95% of settlements occurred prior to litigation, compared to 84% in 2014–15.
Strategies like in-house facilitation have contributed to settlements in the micro business, small business and individual markets, and have resulted in a large reduction in litigation proceeding to the Administrative Appeals Tribunal. The AAT received only 396 applications in 2015–16, down from 533 in 2014–15.
In 2015–16, large business settlements declined significantly from 81 in 2014–15 to 27. The relatively large number of settlements in 2014–15 can be attributed to the resolution of some longstanding large business matters. This compares with 34 settlements in 2013–14 and 27 in 2015-16.
Stage |
Settlement cases |
Total settlements % |
ATO position $m |
Settled position $m |
Variance $m |
Variance % |
|---|---|---|---|---|---|---|
Pre-audit |
742 |
54 |
731.3 |
701.6 |
29.8 |
4 |
Audit |
427 |
31 |
1,027.6 |
674.9 |
352.6 |
34 |
Objection |
132 |
10 |
591.5 |
147.4 |
444.1 |
75 |
AAT |
47 |
3 |
51.4 |
17.8 |
33.6 |
65 |
Court |
14 |
1 |
55.7 |
29.8 |
25.8 |
46 |
Total |
1,362 |
100 |
2,457.5 |
1,571.6 |
886.0 |
36 |
* Some columns may vary from the total due to rounding.
Note: Total includes 676 Project DO IT cases.
Market segment |
Settlement cases |
Total settlements % |
ATO position $m |
Settled position $m |
Variance $ |
Variance % |
|---|---|---|---|---|---|---|
Individuals |
308 |
22.6 |
109.2 |
52.4 |
56.8 |
52 |
High wealth individuals |
90 |
6.6 |
310.6 |
96.1 |
214.6 |
69 |
Micro enterprises |
636 |
46.7 |
283.3 |
142.4 |
140.9 |
50 |
Small-to-medium enterprises |
298 |
21.9 |
4,14.0 |
285.5 |
128.5 |
31 |
Large businesses |
27 |
2.0 |
1,337.1 |
993.9 |
343.2 |
26 |
Not-for-profits & government |
3 |
0.2 |
3.3 |
1.3 |
1.9 |
59 |
Total |
1,362 |
100 |
2,457.5 |
1,571.6 |
886.0 |
36 |
* Some columns may vary from the total due to rounding.
Note: Total includes 676 Project DO IT cases.
**As settlements involve amounts that are necessarily uncertain, especially where the settlement is reached at the audit or pre-audit stage (ie before an assessment), pre-settlement position amounts may not reflect actual liabilities. The settled amounts reflect agreed revenue that will be paid now and into the future as opposed to potential prima facie amounts that could be subject to protracted and costly delay through litigation, remain unpaid, and with no certainty of outcome.
We put a high priority on resolving disputes early, including through settlement where appropriate. This is part of the ATO’s increasing commitment to earlier and more effective dispute resolution.