Disputed tax savings skyrocket as small businesses score $66 million reduction

Small businesses scored a $66.5 million reduction in disputed tax debts in 2018-19 through tax office settlements, about double the amount recorded last year, new figures show.

The Australian Taxation Office (ATO) has published data detailing its dispute management activities in 2018-19, embedded within its broader annual report, which was presented to Assistant Treasurer Michael Sukkar earlier this month and circulated on the ATO’s website last Friday.

The headline figures reveal that while the number of settlement cases fell by 38 for the year, the variation between the tax office position and its overall settled position skyrocketed, up $707 million to $1.76 billion.

This means taxpayers were more successful at securing concessions from the ATO through disputes resolved during the year, the vast majority of which arose from pre-audit and audit activity.

Settlements reached at audit stage accounted for 32% of total settlements by number, totalling $3.14 billion by value, an increase from $2.62 billion last year.

In total, the tax office made $3.92 billion in claims related to settled cases in 2018-19 — $550 million more than last year — despite a slight fall in the number of cases overall.

But despite the increase in the value of the ATO’s position, the overall headline position fell from last year, down $156 million to $2.15 billion.

The number of small business settlements was about the same as last year (171), but the value of ATO claims in these cases increased significantly, up from $60 million in 2017-18 to just under $160 million in 2018-19.

The settled position on small business cases increased three-times over, from $30 million last year to $93.5 million in 2018-19 — a 42% reduction on the ATO’s position.

Public and multinational businesses accounted for just 15% of total settlements by number, but were again the lion’s share of settled cases by dollar value.

In these cases, the ATO claimed $3.51 billion, more than $700 million more than last year, while the settlement position was just $1.93 billion, $140 million less than last year.

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