Our previous article Tax disputes – what to do discussed some of the general stratagems taxpayers can employ when in dispute with the Australian Taxation Office (ATO).
As previously highlighted, quick and early professional advice, assessment of the nature and extent of a dispute and engagement with the ATO can lead to better ultimate outcomes.
Similarly, there are certain things that a taxpayer in dispute with the ATO should not do:
1. Don’t ignore the dispute – deal with the dispute rather than burying your head in the sand. This may delay dealing with matters but will not be productive in the long run, especially if the ATO proceeds with enforcement proceedings to collect any unpaid taxation liabilities. Being proactive with the ATO can allow a taxpayer some control over how, and in what timeframe, a dispute is dealt with.
2. Don’t try to be too clever – where the ATO has assessed a taxpayer as owing taxation liabilities, it is imperative to seek professional advice from either an accountant or a tax lawyer on your position. The ATO does have significant data matching capabilities. Not dealing with or supporting your position in a dispute is likely to leave you with a very negative outcome. We would always advise engagement with the ATO early to bring about the best chance of early and positive resolution.
3. Don’t fail to support your position – the ATO does get it wrong, and often you can reach a better outcome by taking an alternative, principled position, supported by relevant facts and law. Depending on the nature of the dispute, the best advice is to fully support your position, early. Taking an adversarial stance with the ATO at an early stage may forgo an opportunity to resolve a dispute, without it proceeding to expensive and lengthy merits review or Court proceedings. The importance of ensuring your accounting and other documentary records are in order and up-to-date in order to support your position on the facts cannot be emphasised enough.
Taxpayers can always seek to resolve disputes directly with the ATO. Sometimes matters may need to proceed to litigation. Engaging with the dispute and the ATO will, almost invariably, lead to better taxation outcomes.
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