How can a solicitor help to resolve tax disputes?
Handling a tax dispute with the Australian Tax Office can be very stressful, time consuming and expensive. In these circumstances, a solicitor may be crucial to ensure that your tax dispute is managed properly, and resolved quickly, so that your business can get back on track. It is also important to note that a solicitor can independently advise or act in a tax law matter, or work with your accountant.
What is a tax law dispute?
The ATO is responsible for investigating and enforcing tax law. If there is a dispute, the usual process is as follows:
- You receive your Notice of Assessment.
- You lodge an objection to the notice.
- The ATO re-assesses the decision.
- If you are not satisfied with the ATO’s response, you can appeal to the Administrative Appeals Tribunal or the Federal Court for review.
If the ATO issues an amended notice of assessment, you have the right to dispute the notice by appealing the decision. In these circumstances, a solicitor may help in managing the dispute process. It may be possible to avoid expensive litigation by arranging a Dispute Resolution process with the ATO. This may involve mediation.
You should consider lodging an objection with the ATO if:
- You disagree with the way the law has been interpreted, for example you disagree with an amended assessment from the ATO;
- You’re uncertain about your understanding of the law; or
- You want the option of seeking an external review.
A solicitor can act for you in a tax dispute to ensure the best financial outcome for you.
How do I initiate a Part IVC appeal?
If you don’t agree at the objection stage and choose to appeal, Part IVC litigation can be initiated by lodging an application to either the Administrative Appeals Tribunal (AAT) or the Federal Court. There are a number of issues in relation to choosing which jurisdiction to appeal your matter, such as:
- Costs: In Tribunal Proceedings, neither the taxpayer nor the Commissioner will be able to claim any portion of their costs from the other side. This is an attractive proposition if the litigant is unsure of their position, and the potential costs are comparable to the amount of tax. Alternatively, in Federal Court proceedings, the successful litigant will be entitled to claim a portion of their costs from the other side.
- Confidentiality: Federal Court proceedings may be more attractive as they are more confidential than Tribunal Proceedings. In Tribunal Proceedings, only limited circumstances will allow a confidentiality order to be made so that the name or address of a party or witness, or other information remain confidential, or a written decision not be made public. For this to occur, the AAT must be satisfied that there is a good reason for making the confidentiality order. In making this decision, they will also take into account the guiding principle that hearings at the AAT should be public.
- Discretions: When a decision of the Commissioner involves the exercise of a discretion, Tribunal Proceedings may be more attractive as the tribunal is entitled to exercise all powers (including powers of remission of penalty) that the Commissioner is entitled to exercise. Conversely, the Federal Court’s power to review the exercise of a discretion by the Commissioner is limited to reviewing the exercise for errors of law.
- Appeals from first instance decision: The nature of the issue at hand will also influence this question. In the case of a first instance decision from the Federal Court, an appeal to the Full Federal Court will permit the court to have regard not just to findings of fact of the trial judge, but also to the evidence before that judge. Alternatively, an unsuccessful litigant in the AAT can only appeal from the Tribunal’s decision on a question of law.
How can a solicitor help?
The role of a solicitor in a tax law dispute may include:
- Reviewing your amended assessments or directions from the ATO and advise on opportunities to reduce tax;
- Preparing applications for internal review with the ATO;
- Appealing ATO decisions to the AAT and Federal Court
- Negotiating payment plans and remission of interest and penalties with the ATO; or
- Advising you on an appropriate alternative dispute resolution procedure for your dispute.