There’s a considerable amount of ATO documentation, case law and legislation on the format and content of tax disputes. Legal training and negotiation skills play a crucial part in bringing such disputes to a satisfactory conclusion, but drafting skills are also important.
Drafting when there is a tax dispute
Objections, reviews and appeals require the grounds to be stated fully and in detail andstatements of facts, issues and contentions need to be precise.
Apart from in dispute proceedings, private rulings, tax opinions and advice also require a particular form of drafting in order to ensure that the drafter and their firm is protected from risk and liability, and the client and the ATO are serviced efficiently and effectively (there has been a text published on this subject by Australia’s leading tax judge, Tony Pagone).
What about settlement?
Depending on evidence obtained by the ATO and the taxpayer’s situation, parties may wish to settle a dispute prior to litigating. The ATO has a Code of Settlement Practice that outlines the policies and procedures the ATO adopts when choosing to settle a dispute. The Settlement Code outlines which factors tax officers must consider when determining whether to settle.
Where there are contentious issues, Practice Statement PS LA 2007/6 provides additional assistance to the ATO Settlement Code.
Settling a dispute might be appropriate if:
- the benefits outweigh the costs
- there is no contentious point of law involved
- it is not in the public interest to litigate
- a taxpayer’s behaviour is not egregious.
All agreements between the ATO and taxpayers should be evidenced by a deed of settlement, drafted by a lawyer (PS LA 2015/1). Deeds of settlement are intended to resolve disputes, as well as outlining parties’ future obligations. Naturally, settlement agreements are legally enforceable, in accordance with the principles espoused in the case of Grofam.
What are the alternatives to litigation?
The ATO has a strong focus on alternatives to litigation, being alternative dispute resolution methods in which an impartial arbiter assists the ATO and taxpayers in reaching an agreement on confining the issues of a dispute (PS LA 2013/3).
When to start tax litigation
If an offence is not criminal in nature, proceedings will need to be instigated in the relevant court of jurisdiction, such as the Administrative Appeals Tribunal (AAT), or the Federal Court.
Where there is an objection decision, the AAT can “stand in the shoes of the Commissioner”. The Federal Court does not have this authority. Its jurisdiction is one of judicial review and it’s not able to exercise discretion in the absence of a vitiating error of law.
The ATO is bound to conduct litigation in accordance with:
- the model litigant rules
- principles of timeliness and cost-effectiveness
- fair and effective communication of the law.
Still not sure what to do?
It’s necessary that lawyers attend to any disputation, as lawyers are trained to resolve altercations. Written and oral advocacy are skills that are learnt and developed over time. While ADR may be appropriate in the majority of cases, all written and oral communications should be carried out appropriately, in case a matter ends up in the AAT or Court.
For further information, or for assistance with a tax dispute, please contact Marco Saccotelli from BlueRock Partners on +61 3 8658 2032 or firstname.lastname@example.org.