Date posted: 14/02/2019 10 min read

What to do if you and the ATO don’t see eye to eye

Fairer ATO dispute resolution procedures mean talking to the taxman should not come with a sense of dread.

In Brief

  • ATO Second Commissioner Andrew Mills says the tax office is promoting a “culture of fairness” in how it deals with taxpayers.
  • There is a range of dispute resolution procedures available, including in-house mediation, but many objections can be resolved more easily.
  • Sole traders and small businesses should contact the ATO early if there is a problem paying a tax bill as it allows ATO staff to offer alternatives.

By Garry Shilson-Josling

The Australian Taxation Office (ATO) has listened to its critics in the past few years and improved its handling of disputes, says ATO Second Commissioner Andrew Mills. The tax office’s aim, he says, is to promote a “culture of fairness”.

In Mills’ view, if trust in the tax system falls then so does compliance. He says the level of trust is ultimately determined by the quality of the everyday experiences of people as they interact with the ATO, and that quality can in turn be gauged by their perception of fairness in disputes.

“We have to be ever-vigilant on making sure that we are… always treating people fairly, always treating them as if they are to be trusted in the first instance, because trust is a two-way thing,” he says.

So what are your options if an ATO decision doesn’t seem right?

1. Get advice: Mills advises getting professional advice – and it doesn’t have to be the priciest. “There is quality advice being given by accountants and lawyers,” he says.

2. Just call: Sometimes a simple phone call may be enough. “You can ring up, too, but if you want to dispute a specific assessment, ultimately you’re going to need to put something in writing,” Mills says. “But you can get guidance; we have great people at our call centres who are able to assist.”

3. Payment plans: The ATO encourages sole traders and individuals to make early contact with the tax office if they find themselves unable to meet their tax obligations so a payment plan can be set up.

4. Lodge an objection: If the taxpayer is still convinced the ATO has got it wrong, lodging an official objection through the ATO’s website is the next step. Mills says the ATO has an undertaking to talk to everyone who lodges their objection within a few days. “Where it’s relatively straightforward, we will deal with it quickly,” he says.

5. Mediation: There’s a gentler alternative to an objection – in-house facilitation (IHF). An impartial ATO facilitator mediates with the ATO case officer and the taxpayer to try to resolve the issue. This option is available up to the point where legal action is taken. But, unlike formal objections, IHF just gets the discussion going, it doesn’t result in a binding decision.

6. Dispute Assist: Dispute Assist is for those already doing it tough. It offers dedicated guidance for individuals or small businesses not represented by professionals and “suffering significant or exceptional circumstances”.

7. Going beyond the ATO: The number of appeals to the Administrative Appeals Tribunal (AAT) has been trending down, but there were still 344 in 2017-18. The AAT recently announced a pilot scheme to provide pro bono legal advice and support to eligible taxpayers heading to the AAT to have their tax problem reviewed.

Taxpayers can always resort to the courts. The ATO has established a process of early engagement with taxpayers making appeals to the courts and tribunals, with only 102 of 478 cases in 2017-18 going through to decision.

The Inspector-General of Taxation office can also address complaints about how the ATO has dealt with taxpayers from a procedure and policy perspective but its recommendations, while they may have some moral clout in a court case, are not binding.

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