Used appropriately, ADR is a cost-effective, informal, consensual and speedy way to resolve disputes.
Tax disputes arise when the taxpayer disagrees with the Commissioner’s decision about a liability or entitlement. Tax disputes include:
- a formal dispute between the parties about a taxation liability or entitlement, such as an objection
- a dispute arising prior to the issue of assessments for example following a taxpayer’s consideration of the ATO’s position paper.
However, ADR is not only used to resolve substantive disputes. It may also be used to clarify or limit issues, streamline procedures and remove blockers created by relationship issues between the parties.
Broadly, there are three categories of ADR used by the ATO:
- in-house facilitation is the ATO's version of mediation, and is a free service where a trained independent ATO facilitator assists participants to negotiate their dispute
- in large, complex disputes the ATO may consider engaging an external practitioner to conduct ADR
- ADR can also be initiated by the courts or tribunals in litigation cases. Mediation, conciliation and early neutral evaluation are the most commonly used in tax and superannuation disputes.
See alsoExplains how ADR, such as mediation and conciliation are used in tax and superannuation disputes.