Interacting promptly with the Australian Taxation Office (ATO) when superannuation taxation disputes arise provides advisers with the best chance of resolving their clients’ cases, as well as reducing costs, according to an industry lawyer.
Cooper Grace Ward partner Fletch Heinemann said often the problem with the initial ATO letters was that they were written in a way that did not trigger the necessary urgency for the client.
“The most important lesson when dealing with and speaking to the ATO is to get in early,” Heinemann told the SMSF Professionals’ Association of Australia National Conference in Brisbane yesterday.
“There’s no magic to this – you need to make sure there is a full response early on.”
Often, initial responses to the ATO were not satisfactory and severely limited the client’s chances of success as the matter progressed, he said.
“There really is only one chance to make that first impression,” he said.
“We find that if the first response to the ATO is detailed and addresses the issues that the ATO has identified, then [the matter] tends to go away.
“We had one case, for example, where there were clearly all sorts of contraventions in this particular fund, but the initial response to the ATO’s first letter went through each contravention in detail, how the contraventions were fixed or how they were in the process of being fixed and then the steps taken to make sure that similar contraventions like the ones in the files wouldn’t arise again, and that whole issue was shut down at that point.”
He said it was also important to engage early as careful management of a tax dispute, early resolution of a dispute and early engagement of professional advisers could all reduce costs.
When it came to responding to the ATO, clients and advisers should avoid providing a sketchy or long-winded response and also understand the ATO’s obligation was to administer the Superannuation Industry (Supervision) Act, rather than consider whether the outcome was unjust or would result in hardship, he said.
“My experience is also that sometimes people will answer the questions that the ATO asks but not provide the rest of the narrative around what’s happening,” he said.
“Simply providing answers without providing all of the background can be dangerous.
“I had one client, in the context of an income tax audit, who produced a 42-page Word document – it’s really important to get to the relevant stuff because [a long-winded response] is not teasing out the most important things for the ATO to look at.”
He said there were encouraging statistics for the outcomes of ATO disputes, with 87 per cent of cases resolved prior to an Administrative Appeals Tribunal decision and 57 per cent resolved prior to a Federal Court hearing.
