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DJ Cooper Accounting offer expert advice and personalised accounting services to meet the needs of our individual and business clientele.

Our offices in Port Stephens, Raymond Terrace, Nelson Bay, Newcastle and Hunter area are at the heart of each region, so we can stay up to date with all the issues our clients face.

We offer a wide range of accounting and taxation services, including bookkeeping, company secretarial and formation, business support and auditing services. DJ Cooper Accounting also works extensively with clients in relation to the establishment and management of self-managed super funds (SMSFs).

We pride ourselves on providing services of an exceptional standard, as our consistent yearly  growth is entirely due to word of mouth referrals from existing clients and business colleagues. This, combined with on-going extensive technical training and development for our professional staff, positions us as an accounting practice of choice.

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Sometimes the only way to understand a person’s business or financial situation is by meeting face-to-face. All new clients or people looking to speak with an accounting professional are offered an initial consultation with the first hour at no charge. If you have some concerns and wish to take advantage of a confidential personal discussion simply call 02 4983 1611 to arrange a meeting.

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Legalities of reaching settlement with the ATO

Posted on September 20, 2017 by admin

If you find yourself in a position where you need to come to a settlement with the ATO, it is critical you understand the legalities behind the said settlement.

Firstly, understand what a settlement is; an agreement between two parties, for instance, yourself or your business and the ATO. The purpose of the agreement is to resolve a dispute where one or more parties make concessions on what they consider is the legally correct position. There are a number of scenarios in which settlement between an employer or employee and the ATO may occur, such as:

  • tax liability, entitlement or debt;
  • superannuation liability, entitlement or debt;
  • decision under a tax or superannuation law.

Examples of a disputed liability or entitlement specific to the ATO may include:

  • Tax – tax, levy, charge, duty or excise imposed under a law
  • Penalties (exclusive of penalties issued by a court)
  • Payments – offset, grant or benefit under a law
  • Franking credits and debits and foreign tax credits
  • General interest charge and shortfall interest charge and interest
  • Notional tax on losses
  • Credits and refunds of indirect taxes

When negotiating a course of action, settlement can occur at any stage, i.e., before or after the position paper in an audit, or throughout the process of an objection or litigation. If the circumstances are appropriate, and a settlement can be reached in a sensible and amicable manner, going through a formal process of assessment, amendment and objection can be avoided.

Both the ATO and the employer/employee can initiate discussions for settlement. In some cases the employer/employee will not realise they have done something wrong until the ATO approaches them. In other cases, an employer/employee will fear being caught out for evading certain responsibilities and will come forward and declare their wrong-doing, with the hopes of a settlement occurring.

It is common for more than one ATO representative to be present during the settlement process, and the outcome of the settlement will be based on a number of considerations, including:

Relative strength of the parties position

  • This involves evaluation of the employer/employee’s position in relation to the evidence, application of the law to the facts and the amount of tax in dispute, as well as a possible litigation outcome.

Costs vs benefits

  • Considerations relating to continuing the dispute will be determined based on internal and external legal costs to the ATO, cost and risk in collecting liability, financial position of the taxpayer, and effective and efficient use of resources.

Future compliance

  • The ‘good management rule’ will be applied, in which repayment due through litigation is set out so that compliance can be achieved. A plan for repayment will be developed that is realistic and cost-effective.

If you find yourself in a settlement position, seek appropriate professional advice to ensure you fully understand the stipulations set out in the agreement, and that the litigation corresponds correctly with the agreement terms.