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APPLYING FOR COMPENSATION CLAIM

If you think Government agencies like ATO have made a mistake that caused you financial loss or some other detriment, you may be able to make a claim for compensation from the ATO. Before you make a claim, you should ensure you have used all other available review options before making a claim for compensation. The ATO may not be able to pay you compensation if you still have a review option that may resolve the issue. There are two ways the ATO assesses a claim for compensation. They are:

•  Compensation for legal liability (e.g. negligence); or

• Compensation under the Scheme for Compensation for Detriment caused by Defective Administration (CDDA Scheme).

If compensation is not payable by the Department in either of these circumstances, you can apply for an act of grace payment. Act of grace payments are administered by the Department of Finance.

Compensation for legal liability
The ATO may pay compensation where there is a meaningful prospect. The ATO could be found responsible to pay compensation if the matter went to court. Examples include negligence and actions in contract. Settlement of the claim must be in accordance with legal principle and practice.

The CDDA Scheme
The CDDA Scheme allows ATO to compensate you if you have been adversely affected by a defective administration and where no legal liability exists. Payments made under the CDDA Scheme are discretionary and can be made where it is measured that there is a moral obligation to do so, rather than a legal liability. Defective administration includes any of the following:

• Specific and unreasonable lapse in complying with existing administrative procedures;
• Irrational failure to institute appropriate administrative procedures;
• Give advice to a person that was incorrect or ambiguous; 
• Irrational failure to provide appropriate advice that was within an official's power and knowledge to give.

A detriment means financial loss that you have suffered which could include loss relating to personal injury, economic loss or damage to property.

Losses you can't claim
These are the following types of losses which can't be considered under claims of legal liability or the CDDA Scheme:

•  To claim for personal time spent defining an issue; 
• To claim for stress, anxiety, inconvenience; 
• To claim for delay in getting funds from the ATO where statutory interest was paid; 
• To claim for costs related with complying with the tax system including costs related with audits, objections and appeals;
• The cost of putting in a claim for compensation; 
• To claim for taxation with practical review rights that could have been followed.