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Resolving disputes for clients with the Tax Office today

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April 03, 2019

Resolving disputes for clients with the Tax Office today

The Australian Taxation Office has now sanctioned distinct ways of resolving tax disputes and there has been an expansion of resources available to taxpayers to assist with dispute resolution with the Tax Office. Objection rights still underpin taxpayer rights to challenge assessments but a number of different approaches to resolve tax disputes can now be considered and, in various circumstances, there is support with costs of the challenge. Implications of particular approaches and what may be effective in terms of both time and money are considered.

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April 03, 2019
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  1. Resolving disputes for clients with the Tax Office today by

    David Garde
  2. Resolving disputes for clients with the Tax Office today by

    David Garde, tax lawyer david@thetaxobjection.com thetaxobjection.com @thetaxobjection
  3. The protagonists

  4. Know your adversary in a tax dispute • The ATO

    • The challenges to the taxpayer • Huge and powerful (25,000 staff) • Sway, with Treasury, over tax law design • Deep pockets • Tax system underpinned by: • burden of proof on the taxpayer • the conclusiveness of assessments (proof ATO is right) • Obligation is on the taxpayer to make case to the ATO • Legal dispute and appeal rights of taxpayers with ATO generally restricted to Part IVC of the Taxation Administration Act 1953
  5. Know your adversary in a tax dispute (2) • Client

    plusses • Can use tax professionals (cost) • 2 & 4 year time limits raising amended assessments (if no fraud or evasion) • ATO obligation - Taxpayer Charter: • Compliance model advantage for taxpayers who do the right thing • Obligations to treat taxpayers fairly • Model litigant • Part IVC of the TAA • Early stages low cost • AAT, expensive with legal help, but cheaper than court • But watch formalities, “once only” chance & time limits
  6. Strategies watching costs

  7. Early stages = low cost • Inexpensive (relatively) stages in

    Part IVC • Taking tax advice about (potential) matter in dispute • Preparing or responding to position paper • Applying for a binding private ruling • (Last inexpensive point) Objection • Expensive points in Part IVC • Appeal to AAT – but cheaper than court and, definitely, court • So cost saving strategies: • Objection should be a red hot go, once that stage is reached • Use ADR as further inexpensive points to engage ATO before rush to Objection which may be the last “once only” go
  8. Free alternative dispute resolution with ATO • Free services for

    unrepresented clients • Dispute Assist • (est. 2017) Need to show that suffering from significant or exceptional circumstances • Taxpayer entirely in the ATO’s hands – not much to say or that we or you can do to help • National Tax Clinic Program • Proposed on 16 Jan 2019 for 10 unis– trialled at Curtin Uni WA • uni tax (accounting & law) students provide free tax advice & support to individuals & micro businesses under supervision • for “unrepresented and lower income individuals and small businesses” • Oversight by ATO , (Strongly supported by ALP)
  9. ADR for Professionals with ATO • (Still need Part IVC

    rights for Alternative Dispute Resolution leverage) • CIR – Complex issue resolution • Only available to tax agents and legal practitioners • Escalation within the ATO for genuinely complex or intractable administrative tax issues • More … upcoming slide • IHF - In house facilitation • Structured ADR offered by ATO – generally available
  10. In house facilitation • Features - ATOIHF video • ATO

    now has set process for IHF and staff directed to follow the rules • Confidential – not overtly used by ATO to gather info against taxpayers • Mediator structures session with objective to bring dispute to a resolution • ATO provides a trained mediator (ATO staff) for free • So opportunity for taxpayer to present case: • In the application; and • In a mediated meeting with case officer and their superiors (case manager and/or technical officer) • Generally available but preferable before Objection • Informative for Objection (if still needed)
  11. Strategies when disputes get hard

  12. Complex issue resolution • Plusses for the taxpayer • Gets

    escalation from ATO case officer to a senior ATO officer • Can result in a total change of ATO position and resolve matter • Can apply for CIR during lower cost phase of dispute (viz. up to Objection) • Allows focus on nub of issue in dispute • Informs Objection (if needed) • An advantage for a taxpayer who has strong tax technical professional help to identify and explain issue to senior officer • Limitations • CIR not binding on the ATO but will generally be accepted by ATO
  13. Taxpayer strategy From the blog on thetaxobjection.com

  14. Objections

  15. Objections • Watch the dates: • 60 days or 2

    years or 4 years? Appeals 60 days • Lodging late • “Once only” go – be thorough • Dispute limited to grounds in Objection • Establish and clarify facts - facts & evidence databasing? • Supporting materials in appendix – use stat dec? (burden of proof) • spreadsheet/pivot table outcomes – know your case • Pleading the case point by point using boilerplates • Identifying potential administrative law errors by ATO • Procedure • ATO form (or letter) not obligatory - is taxpayer’s objection right • Lodging as correspondence through ATO portal
  16. Part IVC Appeals • Part IVC TAA 1953 – when

    Objection disallowed > • time limit to appeal 60 days after Objection disallowed • (Federal) Administrative Appeals Tribunal • issue fee $920, SBTD $500 • Small Taxation Claims Tribunal issue fee $81 (disputes <$5,000) • Conferencing & early ATO briefing – “T” documents • doesn’t usually award costs (exception “test cases”) • (Major cost usually legal fees including barrister) • Federal Court • Issue fees $1,080 for indivs & small businesses, $3,145 for a company • Costs (often including for senior barristers, generally awarded to winner (lose & taxpayer pays ATO legal costs) (exception “test cases”)
  17. Small business (<$10m aggr t) tax appeals • Commenced 1

    March 2019 • Small business Concierge Small Business Concierge Service within the Australian Small Business and Family Enterprise Ombudsman's office ASBFEO to provide support and advice about the Administrative Appeals Tribunal (AAT) process. • Small Business Taxation Division Dedicated Small Business Taxation Division within the AAT with a supporting case manager, a standard application fee of $500 and fast-tracked decisions to be made within 28 days of a hearing • Absence of or paid lawyer representation The AAT process would be lawyer-free in most cases. Exceptions for the hiring of legal counsel include if the small business elects to have legal representation, the ATO requesting legal counsel to be engaged for both parties and a mutual agreement, or where there is a test case. In such circumstances, the ATO would pay for both parties' legal representation.
  18. Credits •Special thanks to all the people who made and

    released these awesome resources for free: •Presentation template by SlidesCarnival •Photographs by Unsplash & Death to the Stock Photo (license)