• Overview of litigation

    At a glance

    Litigation is a small but very important part of the tax and superannuation systems. It involves a very important right for taxpayers to have ATO decisions independently reviewed.

    The Australian tax and superannuation systems are self-assessment systems, so most of the 47 million forms submitted every year are not adjusted by the ATO. Of the forms lodged in the 2010-11 income year, only about 24,000 taxpayers objected to their liability.

    Most taxpayer objections, nearly 17,400 (72%) are objections to income tax assessments. This is a tiny fraction (0.005%) of the 15.6 million income tax returns lodged. About 72% (around 12,500) of these objections arose directly from ATO's audit and review activities.

    Diagram 1.1 Snapshot of income tax 2010-112

    Diagram 1.1 Snapshot of income tax 2010-11

    Most taxpayer litigation3 (68% in 2010-11) concerns challenges to their income tax assessments.

    In the same year, other litigation initiated by taxpayers involved:

    • goods and services tax (18%)
    • superannuation (12%)
    • fringe benefits tax (1%)
    • excise (1%).

    Most taxpayers who seek independent review prefer the tribunals (80% in 2010-11) - for more information see Section 3. Tribunal review can be less expensive than courts and can also be confidential.

    Most appeals to the tribunals and courts are finalised prior to hearing (61% in 2010-11), see figure 1.1.

    The majority of decisions by the tribunals and courts are favourable to the ATO (65% in 2010-11), see figure 1.2.

    The number of cases in the tribunals and courts has declined as mass marketed scheme-related matters have been finalised. In 2010-11, there were around 1,000 cases in progress, see table 1.1.

    Trends 1 July 2007 to 29 February 2012

    Figure 1.1 Appeals (courts and tribunals)

    Figure 1.2 Decision results (courts and tribunals)

    Figure 1.2 Decision results (courts and tribunals)

    Table 1.1 2010-11 Litigation in progress

    2010-11 Litigation in progress

    Number

    %

    Administrative Appeals Tribunal and Small Taxation Claims Tribunal

    814

    75

    Federal Court

    228

    21

    Full Federal Court

    36

    3

    High Court

    7

    <1

    Total

    1085

    100

      Last modified: 30 Apr 2012QC 25889