The objective of the audit was to assess the effectiveness of the Australian Taxation Office’s use of settlements to resolve taxpayer disputes. The high-level criteria were:
- Does the ATO enter into, negotiate and follow up on settlements in accordance with its policies and procedures, including the Code of Settlement?
- Does the ATO have adequate internal guidance and public reporting for settlements?
The ATO effectively uses settlements to resolve disputes with taxpayers. The ATO has made many improvements to its approach to settlements in recent years, including refreshing the Code of Settlement and introducing the Independent Assurance of Settlement process that has found settlements with large businesses and multinational enterprises to have been fair and reasonable.
The ATO’s settlement practices are effective, in that settlements have been entered into, negotiated and followed up largely in line with its settlement policies and procedures, including the principles outlined in the Code of Settlement.
The ATO has comprehensive policies and procedures to provide guidance to officers with settlement responsibilities, although there is scope for improved conformance with requirements to retain adequate settlement case records in its case management system. Effective mechanisms are in place for the ATO to identify issues, share lessons learnt and make improvements to settlement policies and procedures. The ATO has provided higher levels of public reporting about settlement activities than comparable national revenue authorities.