The ATO places a high priority on resolving disputes early, including through settlements where appropriate. While the ATO says it does not settle disputes at any cost, it says "the sensible use of settlements" is part of its commitment to earlier and more effective dispute resolution.
The following interesting statistics reveal the ATO's use of settlements:
- In 2015–2016, the ATO settled 1,362 cases, 31% more than in the previous year. The ATO said the increased number can be attributed entirely to settlements finalised as part of Project DO IT (Declare Overseas Income Today). In all, there were 676 Project DO IT settlements, making up about 50% of the total number of cases settled. Each of these settlements occurred at the earliest stages, with a focus on prevention to avoid unnecessary and ongoing disputes.
- In 2015–2016, 95% of settlements occurred prior to litigation, compared to 84% in 2014–2015.
- In 2015–2016, the number of large business settlements declined significantly to 27, down from 81 in 2014–2015. This compares with 34 settlements in 2013–14 and 27 in 2015-16. The ATO said the relatively large number of settlements in 2014–2015 can be attributed to the resolution of some longstanding large business matters.
- In 2015–2016 settled cases, the ATO position prior to settlement was $2.457 billion, while the settled position totalled $1.571 billion – a difference of $886 million. The ATO points out that as settlements involve amounts that are necessarily uncertain, especially where a 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, remaining unpaid and with no certainty of outcome.
Source: ATO, Settlements, 23 November 2016, https://www.ato.gov.au/General/Dispute-or-object-to-an-ATO-decision/In-detail/Avoiding-and-resolving-disputes/Settlement/Settlements/.