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17: Administered - Contingent Liabilities

Tax in dispute

2019

2018

$'m

$'m

Contingent liabilities

Balance from previous period

5,544

4,588

New contingent liabilities recognised

584

1,737

Re-measurement

254

626

Obligations expired

(944)

(1,407)

Total contingent liabilities

5,438

5,544

Quantifiable Administered Contingencies

At any point in time, the ATO is involved in a range of dispute resolution processes, including litigation, relating to tax disputes. Details of the outcome of dispute resolution processes are uncertain until a court ruling is made and/or an agreement is reached with the taxpayer at some future date. In most cases it is not possible to estimate with any reliability the likely financial impact of current disputes.

Unquantifiable Administered Contingencies

In some cases, the decision in relation to the cases above will be precedential. No estimate is able to be made as to whether contingent liabilities exist with respect to other taxpayers who may be impacted as a result of the decision.

The ATO acknowledges that the incidence of tax evasion and other breaches of the taxation laws, unavoidably affect its fiduciary responsibilities to the Government. As a result, in most cases it is not possible to estimate with any reliability the likely financial impact of current disputes.

Accounting Policy

The estimated aggregate value of tax in dispute, for which a liability has not been made, represents the contingent liability. A proportion of these cases will be decided in favour of the Commissioner, and as a result, the future financial impact associated with these contingent liabilities is likely to be lower than the estimated aggregate value of tax in dispute.

The amount disclosed as a contingent liability represents the total tax in dispute for cases assessed on an individual basis where an allowance for credit amendment has not been made. As a result of the review undertaken in 2018-19, more cases are being captured in the automated model and therefore will not form part of the contingent liability note.

The effect of this change in accounting estimate as at 30 June 2019 is decrease in contingent liabilities of $790 million.

Refer to Note 15 for the accounting policy on allowance for credit amendments and provisions for refunds.