Minimising and resolving disputes through early engagement

Given the large scale of the ATO's operations and interactions with taxpayers, only a very small proportion of ATO decisions are disputed (by way of objections and litigation).

Our performance in managing taxpayers' objections and other ATO decisions is measured by the number and age of cases resolved and on hand. Just as important are community perceptions of how fair the ATO is in dealing with these cases.

In 2015–16, we dedicated additional resources to resolving the longest running disputes. While this has led to an increase in the average age of completed cases, it has reduced the average age of cases on hand. The higher average age of completed cases reflects a small pool of long-running cases that were resolved during the year.

Since the objections function moved to the ATO's Review and Dispute Resolution business line on 1 July 2015, we have been transforming the way we manage disputes by looking for opportunities to resolve issues earlier. As a result, fewer cases are going to litigation, with the number of objections resulting in litigation falling from 36 per thousand in 2013–14, to 22 per thousand in 2014–15, and to 15.8 per thousand in 2015–16.

We continue to have success with in-house facilitation across all taxpayer segments, but particularly for small business and individuals, which accounted for around 80% of case referrals. In 2015–16, we received 128 referrals, a 30% increase over 2014–15.

The number of appeals to the Administrative Appeals Tribunal (AAT) against decisions by the Commissioner fell by 26% during 2015–16 (from 533 in 2014–15) – further evidence of our success in achieving early resolution.

The reduction in litigation cases has largely been in the AAT due to a range of early engagement strategies, improved client service and the provision of an In House Facilitation service. While we have fewer cases that go through court, we have been successful in pursuing litigation for law clarification purposes and in matters including fraud and evasion. This approach ensures that the ATO continues to pursue the right litigation matters for the right reasons.