About this report
This is our third year publishing insights on settlements with public and multinational business, and our second year publishing insights on disputes.
This report outlines our key findings and observations on income tax, PRRT and GST disputes for 2024–25. The report covers:
- Compliance results
- Disputed assessments
- Dispute resolution: objections, settlements, litigation and mutual agreement procedures (MAP).
Key highlights
- Our compliance activities in respect of public and multinational businesses continue to raise significant liabilities.
- An additional $2.2 billion was paid voluntarily as a result of ATO compliance actions taken in prior years as well as preventative compliance intervention.
- We raised $4.11 billion in total income tax liabilities during 2024–25. This was made up of $2.62 billion in tax liabilities, $331 million in interest and $1.16 billion in penalties.
- We raised around $385 million in total GST liabilities during 2024–25. This was made up of $359 million in tax liabilities, $14 million in interest and $12 million in penalties.
- Compliance results are concentrated in a small number of taxpayers.
- Income tax
- 167 taxpayers received a tax and/or penalty assessment during 2024–25.
- 12 taxpayers received amended tax assessments greater than $50 million raising $2.16 billion in tax liabilities from 14 matters.
- 10 taxpayers received penalty assessments greater than $10 million raising $1.14 billion in penalty liabilities.
- GST
- 311 taxpayers received a tax and/or penalty assessment during 2024–25
- 7 taxpayers received amended tax assessments greater than $5 million raising $214 million in tax liabilities.
- 4 taxpayers received penalty assessments greater than $1 million raising $9.5 million in penalty liabilities.
- Income tax
- Despite large business being one of the most compliant sectors, disputes with large business continue.
- Of our current 127 audits, 40 relate to taxpayers in the Top 100 population and 62 relate to taxpayers in the Top 1,000 population.
- Global profit shifting continues to be a major focus in our disputes.
- Around 70% of current income tax audits involve behavioural risks relating to international related party dealings and cross border investments and structures.
- Transfer pricing is the most relevant event attracting our attention, where well understood issues of financing and marketing hub arrangements continue to be in focus. However increasing resources are being applied to mischaracterisation and supply chain risks in the context of evolving business models. Intangible arrangements and royalty characterisation are also significant issues attracting our attention.
- We continue to examine cross border structural issues including debt loading/dumping, accessing of treaty benefits and synthetic equity arrangements. We apply significant resources to business and asset dissipation, where multiple entry consolidated (MEC) rule exploitation and non-resident tax exemptions risks are scrutinised.
- Where appropriate, and consistent with the Commonwealth's model litigant policy, we continue to resolve a number of disputes by way of settlement.
- We settled 18 separate disputes with public and multinational businesses securing $811 million of tax revenue. This is down in both number of settlements and quantum of tax secured compared to previous years.
- Our total settlement variance for public and multinational businesses was 36%, which means we secured 64% of the disputed amount that we considered payable under our starting position before settlement.
- The 5-year average variance of 39% for settlements with public and multinational groups is consistent with the 5-year average of other key taxpayer segments.
Large business compliance
Public and multinational businesses includes Australian public companies and foreign-owned entities or multinational groups. The majority of our compliance resources for this sector focus on the large businesses in this population (taxpayers with turnover of $250 million or greater).
Large corporates play an important role in our corporate tax system. Corporate tax is highly concentrated in the largest businesses in Australia, with these businesses paying 65% of company tax. Large business also supports the tax compliance of other taxpayers through their impact on confidence in the tax system and, in some cases, the information they provide to facilitate compliance.
Our annual Corporate tax transparency report provides insights into how much income tax is paid by our largest taxpayers.
Since the start of the Tax Avoidance Taskforce in 2016, we have seen improvement in the tax compliance of large corporate groups. Our tax-gap analysis shows for 2022–23 that 94.1% of tax is paid on lodgment of returns and improves to 96.3% after compliance activity. See our Annual tax gap findings for more detail.
The tax gap indicates large business has some of the highest levels of tax compliance of all taxpayer groups.
However, there will always be the need to have a well-resourced and robust audit program. Disputes happen even with taxpayers that are otherwise highly compliant and the economic characteristics of Australia (a net capital importer with a high tax rate) means we are susceptible to profit shifting. High reliance on corporate tax and high levels of concentration with the largest entities means if tax risk proliferates, it can impact government revenue.
Compliance results
Overview of our programs
We are responsible for ensuring public and multinational businesses (including large business) meet their Australian tax obligations. We do this primarily through the Tax Avoidance Taskforce and specific GST compliance programs. Significant funding from government for these programs, ensures businesses are meeting their Australian tax obligations.
Our justified trust programs aim to continually monitor Australia's largest businesses via the Top 100 program and review the tax affairs of the largest 1,000 businesses at least once every 4 years. Sophisticated data and analytics programs detect tax risks across all public and multinational businesses, including those not covered by the justified trust programs (those in the large risk or medium and emerging populations).
See the Top 100 justified trust program findings report and the Top 1,000 findings report.
When we detect material tax risk, we review further or audit to investigate the tax issues and, if necessary, correct the tax outcome. We also apply penalties in appropriate cases.
Typically, Public Groups has between 100 and 150 audits of public and multinational businesses at any given time. Due to the complexity of issues and, in some cases, difficulties associated with information gathering, audits often take years to conclude.
As of 1 July 2025, there were 127 audits in progress involving 96 different economic groups. Of these, 116 audits involve income tax issues. This reflects an increase of 16 audits in progress compared with the 2023–24 period.
The majority of our audits continue to relate to large businesses in the Top 100 and Top 1,000 programs. Of the audits on hand, 40 relate to 19 economic groups in the Top 100 population and 62 relate to 53 economic groups in the Top 1,000. A smaller number of audits relate to taxpayers outside the Top 100 or Top 1,000 population. Almost all these audits relate to income tax.
Since the Taskforce commenced in June 2016, we have raised $26.9 billion in liabilities from public and multinational businesses (as of 30 June 2025). Around $15.4 billion of this is attributed to the additional funding provided through the Tax Avoidance Taskforce with the balance primarily due to base funding.
Common issues addressed through compliance
Our compliance activities consider a broad range of behaviours and focus areas. The following tables show the key behaviours, events and areas of our compliance programs. Note: This list is not exhaustive.
|
Events |
Focus areas |
|
|---|---|---|
|
Transfer pricing and arm’s length conditions |
|
|
|
Intangibles arrangements |
|
|
|
Events |
Focus areas |
|
|---|---|---|
|
Debt and capital structures |
|
|
|
Disposal of assets or businesses by foreign residents |
|
|
|
Structuring through vehicles or arrangements |
|
|
|
Events |
Focus areas |
|
|---|---|---|
|
Characterisation of business activities |
|
|
|
Treatment of distributions |
|
|
|
Claiming other tax concessions or rates |
|
|
|
Treatment and reporting for GST purposes |
|
|
Seventy per cent of our income tax audit program involve issues relating to global profit shifting, including cross-border international arrangements and international-related party dealings. This is consistent with last year's observations. The balance of the program (30%) is investigating risks relating to domestic tax positions and structures adopted by taxpayers.
Transfer pricing is the most relevant event attracting our attention, where well understood issues of financing and marketing hub arrangements continue to be in focus. However, increasing resources are being applied to mischaracterisation and supply chain risks in the context of evolving business models. Intangible arrangements and royalty characterisation are also significant issues attracting our attention.
We continue to examine cross border structural issues including debt loading/dumping, accessing of treaty benefits and synthetic equity arrangements. We apply significant resources to business and asset dissipation, where MEC exploitation and non-resident tax exemptions risks are scrutinised.
The key behavioural risks observed for audit matters relating to GST relate to high-risk positions linked to retrospective GST refunds, treatment of real property and accommodation, and financial services risks involving apportionment of input tax credits.
Preventative compliance results
When determining the total revenue impact of a particular year, we include the additional tax paid voluntarily as a result of prior interventions. Common ways this can occur include the following:
- Additional tax paid due to our past compliance actions having a lasting effect. Typically, this will be the additional tax collected in later years due to locking in go-forward outcomes under settlements or the elimination of prior-year tax losses.
- Estimated additional tax paid voluntarily when we have influenced tax outcomes through preventative actions, if there is a clear causal connection with our engagements. This can include influencing the tax outcomes of transactions before lodgment in programs like Top 100 justified trust, private rulings and advance pricing agreements.
An additional $2.2 billion was paid voluntarily in 2024–25 as a result of ATO compliance actions taken in prior years as well as preventative compliance intervention. The majority of this revenue is due to locking in go-forward outcomes through settlements. This revenue is on top of additional revenue raised via our audit program or reported as settlement collections.
Post lodgment compliance results
These compliance numbers and results focus on the results for compliance activities conducted by the Public Groups business line. Compliance activities regarding income tax, GST and PRRT for public and multinational businesses are mainly run by Public Groups and the results reflect the vast bulk of tax liabilities for these entities. However, from time-to-time, other business lines conduct compliance activities on these businesses. These outcomes are not included in these results in this section.
|
Financial Year |
Tax liability |
Interest |
Penalties |
Total Liabilities |
|---|---|---|---|---|
|
2025 |
$2.62 billion |
$0.33 billion |
$1.16 billion |
$4.11 billion |
|
2024 |
$2.52 billion |
$0.10 billion |
$0.14 billion |
$2.76 billion |
|
2023 |
$1.81 billion |
$0.32 billion |
$0.50 billion |
$2.59 billion |
|
2022 |
$1.43 billion |
$0.44 billion |
$1.00 billion |
$2.87 billion |
We issued income tax and/or penalty assessments to 167 taxpayers which raised $4.11 billion in total tax liabilities in 2024–25. This represents an increase of $1.35 billion from 2023–24, primarily due to a significant increase in penalties raised against a small number of taxpayers.
In relation to income tax liabilities raised for 2024–25:
- 159 taxpayers received amended income tax liability assessments.
- 12 taxpayers received amended assessments greater than $50 million, raising tax liabilities of approximately $2.16 billion.
Tax liabilities can vary year-on-year due to the variability in the issues and size of assessments. However, we generally expect income tax liabilities will average around $2 billion per year. Emerging issues and business models, as well as one-off events, such as business disposals, continue to produce material income tax adjustments.
Not all amended assessments will attract a penalty. As we typically consider penalties following the conclusion of an audit, some of the penalty assessments raised during the year related to audits concluded in the previous financial year (for example, 2023–24). Equally, we are still determining penalties for a number of audit assessments issued in 2024–25.
Penalties increased by more than $1 billion from 2023–24. Penalty amounts will differ depending on the shortfall amount and the behaviour leading to the shortfall. Penalties may also be doubled for taxpayers that are significant global entities in certain circumstances. This can lead to significant variability in amounts.
In relation to the penalty liabilities raised for 2024–25:
- 30 taxpayers received penalty assessments.
- 10 taxpayers received penalties greater than $10 million, accounting for $1.14 billion of liabilities.
Interest is calculated as per the statutory formula. Under the law, we are required to consider remission of interest and penalties in certain circumstances. We have published practice statements that our staff must follow when considering whether to remit interest or penalties.
|
Industry |
No of taxpayers |
Proportion of taxpayers |
Proportion of income tax liabilities |
|---|---|---|---|
|
Wholesale, Retail & Services |
89 |
56% |
26% |
|
Manufacturing, Construction & Agriculture |
31 |
20% |
5% |
|
Mining, Energy & Water |
17 |
11% |
49% |
|
Financial Services |
22 |
14% |
19% |
|
Total |
159 |
100% |
100% |
The mining, energy and water sector represents a significant proportion of income tax liabilities raised (49%). Notwithstanding that, they represented only 11% of the population. This was driven, in part, by 4 significant disputes with taxpayers in this sector which comprised 90% of the total tax liabilities raised against all mining, energy and water taxpayers. Owing to the scale of operations in this sector, it is not unusual for assessments to be large.
The wholesale, retail and services sector represents more than 50% of taxpayers while representing 26% of the total tax liabilities raised. The top 3 taxpayers account for more than half of total tax liabilities raised for all wholesale, retail and services taxpayers.
|
Industry |
No of taxpayers |
Proportion of taxpayers |
Proportion of tax liabilities |
|
|---|---|---|---|---|
|
Mining, Energy & Water |
5 |
42% |
59% |
|
|
Wholesale, Retail & Services |
4 |
33% |
19% |
|
|
Financial Services |
3 |
25% |
22% |
|
|
Total |
12 |
100% |
100% |
|
As noted, 12 taxpayers received an amended assessment greater than $50 million, raising liabilities of approximately $2.16 billion. Mining, energy and water sector taxpayers contribute a significantly higher proportion of raised liabilities, consistent with the broader group of assessments.
|
Financial Year |
Tax liability |
Interest |
Penalties |
Total Liabilities |
|
|---|---|---|---|---|---|
|
2025 |
$359 million |
$14 million |
$12 million |
$385 million |
|
|
2024 |
$317 million |
$7 million |
$39 million |
$363 million |
|
|
2023 |
$190 million |
$6 million |
$6 million |
$202 million |
|
|
2022 |
$377 million |
$33 million |
$3 million |
$413 million |
|
The total liabilities for GST raised was around $385 million, an increase from last year's results.
Around 75% of the total liabilities for GST resulted from voluntary disclosures made under our assurance and risk-based engagements in 2024–25. Voluntary disclosures can be a sign of good governance if businesses are detecting errors and making voluntary disclosures as part of their business-as-usual governance processes. However, many businesses wait to be notified of our review activity before doing these checks. We check voluntary disclosures to ensure remediation plans exist to ensure the error does not happen again.
Liabilities were also received through risk-based programs targeting cross-border GST, financial services, property and correct reporting.
As noted in last year's report, GST audits are not as common as income tax audits (although this may change in the future). Nonetheless, we typically expect GST liabilities to average around $300 million per year.
Independent review
We may offer large businesses the opportunity to apply for an independent review of proposed audit adjustments if they meet certain eligibility criteria (see Large market independent review). These reviews occur before an audit assessment or amended assessment is issued. There is no legal right to an independent review. Independent reviews are conducted by a separate business line, by an independent senior officer in our Objections and Review branch. Other dispute resolution options, like the objection process are still available after an independent review.
The independent review service is generally not offered for matters about transfer mispricing, or those involving the application of anti-avoidance rules. Some matters may also be ineligible if they are considered through other processes, such as the General Anti-Avoidance Rules Panel.
Five matters from Public Groups were subject to independent review in 2024–25, an increase of 3 matters compared with the previous reporting period. In all 5 independent reviews, it was determined that our compliance team had the better view.
The low number of independent reviews, in part, reflects that many audits involve transfer pricing or the application of the anti-avoidance rules and are consequently not eligible for independent review.
Disputing amended assessments
Generally, taxpayers have a legal right to object to some decisions we make. This includes, for example, amended assessments issued following an audit or the issuing of a private binding ruling decision.
Of the $2.62 billion in income tax amended assessments raised during the year, $582 million was not disputed and was paid (or, is expected to be paid). The balance of $2.03 billion is being disputed (or potentially disputed).
Payment of tax in dispute
Typically, we do not enforce payment of a tax liability when taxpayers are disputing an assessment. However, large businesses and other high-risk taxpayers are expected to pay all or part of the liability owing. Large businesses are expected to at least enter into a 50:50 arrangement, paying 50% of the tax liability and fully paying any diverted profits tax (DPT) assessments whilst the dispute is being resolved.
If the dispute is resolved in our favour (for example via litigation), the remaining 50% of primary tax and interest charge are payable to us. If the decision is wholly favourable to the taxpayer, any primary tax paid is refunded to the taxpayer together with interest.
Approximately $795 million has been paid under a 50:50 arrangement in respect of income tax assessments issued in 2024–25. We expect this number to increase as some taxpayers still have time to object to their assessment and enter into a 50:50 arrangement.
Taxpayers can also object to assessments received in respect of penalties. We do not enforce payment of this amount until both the substantive tax and penalty decisions are fully resolved.
Disputed assessments
Objections for disputes involving public and multinational businesses can often take years to determine. This is partly due to the factual and legal complexity of the matters. Some matters will be put on hold, pending other processes such as the mutual agreement procedure under double tax treaties.
Taxpayers are legally able to, and typically do, provide substantial additional information as part of the objection process. Similarly, we may seek additional information through the objection process. New information can impact the outcomes reached at audit. We continue to encourage taxpayers to provide all relevant information as part of the audit process, so this information can be considered and factored into our position as early as possible.
The following table shows the total liabilities in dispute for assessments issued in the past 4 years that are still in dispute.
|
Year audit assessment issued |
Matters still in objection |
Matters still in litigation |
Tax in dispute |
Penalties in dispute |
Interest in dispute |
Total in dispute |
|---|---|---|---|---|---|---|
|
2024–25 |
19 |
0 |
$2.03 billion |
$1.10 billion |
$312 million |
$3.45 billion |
|
2023–24 |
14 |
0 |
$2.01 billion |
$100 million |
$56 million |
$2.17 billion |
|
2022–23 |
11 |
0 |
$779 million |
$389 million |
$262 million |
$1.43 billion |
|
2021–22 |
11 |
1 |
$957 million |
$545 million |
$390 million |
$1.89 billion |
Note:
- Primary tax and penalty matters are included separately in the count of matters in objection and litigation.
- For assessments issued in the 2025 financial year, the tax/penalty/interest in dispute amounts include 2 matters that are expected to be disputed but were not objected to as at 30 June 2025 and so we expect the number of matters in objection will increase.
- Since 30 June 2025, one of the objections for a 2022 assessment has proceeded to litigation.
We made objection decisions regarding 12 primary tax disputes and 4 penalty disputes with public and multinational businesses in 2024–25. In 9 disputes, the objections were found either invalid or withdrawn due to settlement.
We found in favour of the ATO in whole or in part in the majority of cases as follows:
- Tax liability
- 11 (92%) in favour of ATO in whole or in part
- 1 (8%) in favour of the taxpayer.
- Penalties
- 3 (75%) in favour of the ATO in whole or in part
- 1 (25%) in favour of the taxpayer.
Similar to last year's observations, this suggests that the decisions of compliance teams are being at least partly upheld in the majority of cases.
Dispute resolution
Settlements
Settlements and litigation are important components of our dispute resolution strategy. We settle disputes where appropriate, and, alternatively, we pursue other matters in court.
Settlements contribute to a well-functioning tax system, providing fairness and an efficient use of our resources. Settlements secure revenue that may otherwise be at risk or difficult to pursue due to time, cost and legal risk.
Our approach to settlements with public and multinational businesses
We only settle disputes when it is appropriate. We are guided by the ATO's Code of settlement and our obligations under the Legal Services DirectionsExternal Link, including the obligation to act as a ‘model litigant’.
When deciding whether to settle disputes, we consider the strength of the parties' positions, the cost and benefits of the dispute continuing and the overall value for the community. We may engage experts and senior legal counsel to assist in determining the prospects of success and whether settlement is appropriate. Each case is considered on its merits regarding the facts and issues, evidence on hand and the individual circumstances of the case. See Managing disputes with large corporate groups.
Settlement statistics for public and multinational businesses 2024–25
We settled 18 cases with 33 public and multinational businesses in 2024–25. This includes settlements across all parts of the ATO not just Public Groups.
It's common for disputes with public and multinational businesses to involve several legal entities within an economic group. As a result, settlements will typically have multiple counterparties as signatories to the settlement deed.
These 33 parties to settlement agreements accounted for around 13% of parties to settlements across all client groups and around 65% of the total tax revenue secured.
Settlements with public and multinational businesses secured around $811 million of tax revenue in 2024–25. This is less than the 5-year average of approximately $1.6 billion per year. The varying size and nature of disputes means settlement amounts fluctuate from year to year. However, the lower number of settlements for 2024–25 has contributed to the result.
Figure 1. Five-year trends for tax revenue secured from settlements with public and multinational businesses
Our settlements also secure outcomes for future periods where relevant and appropriate. If a risk is systemic in nature, spanning years, for example related party loans, we only settle if the taxpayer agrees to change their future behaviour driving the tax outcomes or tax performance. This includes securing agreement from the taxpayer to unwind arrangements or features of an arrangement that concern us.
This means, in addition to resolving past years, we achieve future behavioural change and increased tax collections through the settlement process. This creates greater certainty for the tax system and government revenues. Nine public and multinational business settlements included future-year obligations in 2024-25.
Types of issues settled
All settlements with public and multinational businesses related to income tax in 2024–25.
Seven settlements involved transfer pricing risks. These cases are typically fact-dependent, potentially involving the consideration of complex valuation, pricing and economic issues. Litigating these cases holds considerable risk, so settlement is sometimes a desirable resolution for both parties. The ability to 'lock in' future satisfactory pricing (rather than potentially having to re-audit and then re-litigate) is also desirable.
Several settlements considered the revenue/capital characterisation of receipts and outgoings. These disputes are also fact-dependent and account for 6 settlements with public and multinational businesses this year.
Stage at which matters settle
Settlement can occur at any stage, including before an audit commences, during an audit, objection or litigation. However, we will not settle a case until we have sufficient information to understand the facts and issues.
Thirteen of all public and multinational business settlements occurred before or during an audit in 2024–25. A further 3 settlements occurred during an objection and 2 at the litigation stage.
Settlement variance
Settlement variance reflects the amount that we have conceded in reaching settlement as compared with our starting position.
Our total settlement variance for public and multinational businesses was around 36% in 2024–25. This means we secured 64% of the disputed amount that we considered payable under our starting position.
With the significant size of public and multinational business disputes and differing legal risk between matters (and therefore settlements), settlement variance may move sharply from year to year. Our 5-year average of settlement variance with public and multinational businesses is around 39% (that is, on average around 61% of revenue is secured). This is consistent with the average variance across all client segments.
Figure 2. Five-year trends for public and multinational business settlement tax variance
Adjustments made in our settlements depend on the facts and legal issues in dispute. The variance from our starting position does not necessarily represent an amount that would have been collected had the dispute continued. For example, the taxpayer may provide further and better evidence to support their position over time.
Rigorous processes support our settlement positions. We consider advice by legal counsel and experts, as well as the surrounding circumstances of each case.
For significant settlements, our decision-making process is reviewed independently by a former federal court judge to assess whether it is fair and reasonable as outlined below. See Independent assurance of settlement outcomes.
Ensuring compliance for the future
To create certainty for us and the taxpayer, our settlements will often secure future tax outcomes by setting the basis on which a taxpayer will lodge in the future.
If a settlement provides for ongoing, or future, treatment of an arrangement, we monitor subsequent lodgments to ensure compliance with the terms of the settlement.
Taxpayers are required to annually disclose, via the reportable tax position (RTP) schedule, if they have complied with a settlement agreement in place for the year and if there have been changes in the relevant and material facts on which the settlement was based. We provide information on the aggregated disclosures made by large public and multinational businesses through Category C of the RTP in our RTP Findings Report.
There were 37 disclosures made in relation to taxpayer's compliance with future year compliance agreements in 2024–25. Disclosures increased from the previous year due to an additional subcategory for taxpayers to disclose their compliance with terms of settlement deed or future compliance agreement.
Out of the 37 disclosures made this year, 8 disclosures were in relation to changes in the relevant and material facts. We continue to monitor and engage with taxpayers to confirm compliance with the terms of their settlement deeds or future compliance arrangements. See Findings report RTP – Public and multinational businesses.
We may also verify compliance with settlement terms as part of our engagement with our Top 100 taxpayers, Top 1,000 taxpayers, through the Justified Trust program, or as part of a specific engagement.
Transparency and settlement
We are committed to transparency with our approach to collecting revenue and delivering results for the Australian community. The details of specific settlements are covered by confidentiality provisions and tax secrecy requirements of the taxation law.
With significant public interest in these matters, we encourage large businesses to publicly disclose when they enter settlements with us. Particularly sensitive cases may require a public disclosure as part of the settlement agreement. In some cases, we will also issue a media statement following a public disclosure of a settlement.
Sharing settlements with other jurisdictions
International Exchange of Information (EOI) is key to sharing taxpayer-related information between Australia and other jurisdictions to administer and enforce Australia's tax laws. Settlement information may be exchanged with our treaty partners if they are relevant to the administration and enforcement of each other's domestic tax laws.
External scrutiny of our settlement decisions
Our settlement practices have been subject to external scrutiny by the Australian National Audit Office (ANAO). See The Australian Taxation Office’s Use of SettlementsExternal Link. The ANAO found our practices effective, and that settlements have been entered into, negotiated and followed up in line with our settlement policies and procedures, including the principles outlined in the ATO's Code of settlement.
The ANAO found, when compared with other national revenue authorities, that we provide the highest level of public reporting around settlement activities. Our focus remains on ensuring we continue to deliver this benchmark of transparency and reporting around our settlement activities.
Independent assurance of settlement outcomes
The Independent Assurance of Settlements (IAS) Program is a cornerstone of our approach to maintaining community confidence in the Australian taxation and superannuation systems. Under this program, we engage a former federal court judge to independently assure our largest and most significant settlements. This provides community confidence that our settlements and settlement process are fair and reasonable.
Settlements satisfying any of the following criteria will be subject to assurance by a former federal court judge:
- if a pre-settlement starting position is greater than $50 million
- a settlement amount greater than $20 million
- the settlement variance is greater than $20 million.
Deputy commissioners can also refer a settlement for review under this program, even if it doesn't meet the standard criteria. Examples of this include:
- if public interest in the settlement is likely
- a former ATO Assistant or Deputy Commissioner is representing the taxpayer in the settlement process
- the settlement is the first dealing with particular matters and we want to test our approach.
Outcomes from the IAS program are reported in our annual report. As independent assurers review settlements after they are finalised, they may not be reviewed in the same income tax year in which they were settled.
Fifteen settlements with public and multinational businesses were independently reviewed under our IAS Program in 2024–25.
All but one were found to be a fair and reasonable outcome for the Australian community. The other was found to be not fair and reasonable, and we have made process improvements to address learnings from that finding.
Feedback from the IAS program is invaluable and we thoroughly consider all findings. Disputes with public and multinational businesses are highly complex. We continuously look to improve corporate settlement practices to ensure settlement practices and decisions are robust. This is fundamental to ensuring we can demonstrate that our settlements are fair and reasonable.
Our corporate settlement processes ensure settlements are only concluded in the best interests of the community, adhering to our ATO Code of settlement. Our commitment to considering all recommendations from our independent assurers, regardless of the finding, ensures a well-functioning settlement system. We are continually strengthening our settlement systems and practices, and are:
- undertaking a careful review of our corporate settlement practices
- engaging with our key stakeholders to enhance transparency and accountability
- identifying opportunities to refresh and improve our settlement systems and tools.
Litigation
Litigation is an important part of our dispute resolution strategy, and we aim to have appropriate matters pursued in court. Typically, this will be if it's appropriate to clarify the operation of the law, we want to send a strong signal about unacceptable behaviours (such as tax avoidance), or if there are significant intractable disputes.
There were 8 litigation decisions handed down involving public and multinational businesses in 2024–25:
- 7 decisions were favourable (88%)
- 1 decision was unfavourable (12%).
We carefully consider all litigation outcomes and adjust our compliance approach and guidance to reflect the courts’ decisions and interpretation of the law. To further guide large business, we issue decision impact statements to ensure taxpayers understand our view of the decision.
The following table shows a list of decisions handed down during 2024–25 in significant litigation matters involving public and multinational businesses.
The list relates to matters decided in 2024–25, but will not include the decision in Commissioner of Taxation v. PepsiCo, Inc. [2025] HCA 30. This will be included in the results for 2025–26. We acknowledged the decision in a media release – High Court decision in Commissioner of Taxation v PepsiCo, Inc on 13 August 2025.
|
Matter |
Issues |
Outcome |
|---|---|---|
|
Alcoa of Australia Ltd v Commissioner of Taxation [2025] ARTA 482 |
Related party transactions and transfer pricing |
An unfavourable outcome for the Commissioner at the Administrative Review Tribunal. ATO did not appeal. |
|
Commissioner of Taxation v Esso Australia Resources Pty Ltd [2024] FCAFC 151 |
Petroleum resource rent tax |
A favourable outcome for the Commissioner at the Full Federal Court. No appeal. |
|
Tabcorp Maxgaming Holdings Ltd v Commissioner of Taxation [2025] FCA 115 |
Taxation of financial arrangements (TOFA) |
A favourable outcome for the Commissioner at the Federal Court. Currently on appeal at the Full Federal Court. |
|
Oracle Corporation Australia v Commissioner of Taxation (Stay application) [2024] FCA 1262 |
Double taxation treaties and mutual agreement procedures |
A favourable outcome for the Commissioner at the Federal Court. Currently on appeal at the Full Federal Court. Matter was heard on 27 August 2025 and awaiting judgment. |
|
AusNet Services Ltd v Commissioner of Taxation [2025] FCAFC 21 |
Capital gains tax |
A favourable outcome for the Commissioner at the Full Federal Court. Special Leave Application to the High Court was refused. |
|
Michael John Hayes Trading Pty Ltd as trustee of the MGH Trading Trust & Ors v Commissioner of Taxation [2024] HCASL 268 |
Dividend stripping |
A favourable outcome for the Commissioner at the Full Federal Court. The Special Leave Application to the High Court was refused. |
|
Benson Healthcare Enterprises Pty Ltd v Commissioner of Taxation (Practice and Procedure) [2025] ARTA 19 |
Cash flow Boost |
A favourable outcome for the Commissioner at the Administrative Review Tribunal. |
|
Singapore Telecom Australia Investments Pty Ltd v Commissioner of Taxation (Special Leave Decision) |
Cross-border transfer pricing and arm’s length conditions |
A favourable outcome for the Commissioner. Special Leave Application to the High Court was refused. |
Mutual agreement procedure
Australia's network of double taxation treaties allows taxpayers to request a mutual agreement procedure (MAP) if they consider that they are not being taxed according to a tax treaty.
If we take action in relation to cross-border dealings, for example raising an amended assessment, the taxpayer may be assessed on the same income, profit or gain twice – once in Australia and once in the other jurisdiction. In practice, the taxation of the amount included in the other jurisdiction may be at much lower rates than Australian corporate rates, so is unlikely to result in total tax being double that payable in Australia.
Nonetheless, if there is a tax treaty between Australia and the other jurisdiction, the taxpayer may request a MAP to relieve taxation caused by double inclusion. We will also receive MAP applications generated from compliance activities of treaty partner jurisdictions (known as inbound MAPs).
Under a MAP, Competent Authorities (CA) of the relevant jurisdictions engage to resolve the treaty issues and double taxation. In most cases we can reach agreement with the other jurisdiction to resolve the MAP. The taxpayer is not involved in these negotiations and is not legally bound by them, although, in practice, will usually observe the outcome of the negotiations.
Some treaties allow taxpayers to request mandatory arbitration, if an agreement has not been reached by the jurisdictions in the specified time period (usually 2 years). If this occurs, the jurisdictions may be required to progress to arbitration. We anticipate a similar practical challenge with mandatory arbitration, as the resolution is not necessarily binding on the taxpayer. To date, we have had only one dispute progress to mandatory arbitration and this is still at very early stages.
We had 30 open MAPs arising from our audit activities in respect of public and multinational businesses as of 30 June 2025. We received 9 new MAP requests resulting from our audits in 2024–25 and concluded 3 MAPs related to ATO disputes. All commenced in prior years. In all 3 cases, a mutual agreement was reached with our treaty partners to resolve double taxation.
Common issues of MAPs related to ATO disputes reflect issues in our audit program, that is, intangibles migration, inbound distribution and commodity exports.
The following table details concluded MAPs (18) in relation to ATO disputes with public and multinational businesses for the past 4 years.
To avoid doubt, we note this data does not include MAP requests received as a result of other jurisdictions' compliance activities or requests not arising from compliance actions (for example, requests for residency determination).
|
Financial year |
Closed cases |
Primary issue |
Countries |
|
|---|---|---|---|---|
|
2025 |
3 |
Transfer pricing |
USA Sweden China |
|
|
2024 |
6 |
Transfer pricing, royalties |
China India |
|
|
2023 |
7 |
Transfer pricing |
Germany India Ireland Japan Singapore |
|
|
2022 |
2 |
Transfer pricing |
France Singapore |
|