• 4. Court litigation

    At a glance

    About 14% of taxpayers seeking independent review of ATO decisions appeal to the court. Court cases include a small number of appellate cases, appeals by taxpayers or the ATO from tribunal decisions, and from initial court decisions to higher courts.

    The number of appeals lodged in 2011-12 was lower than 2009-10 and 2010-11. See figure 4.1.

    Taxpayer appeals to courts which settled prior to hearing peaked at 86% in 2009-10 reflecting the settlement of mass-marketed scheme-related cases. In 2007-08, the ATO conceded a significant number of cases, 51, or 37% of cases finalised pre-hearing. This included 35 individual cases with multiple linked cases that were finalised as part of a review of litigation. There were also 8 mass-marketed scheme-related cases that were conceded in this year. In 2011-12, there was an increase in settled cases, largely due to settlement of linked cases.

    For most years, small numbers of cases have been conceded by the ATO or by taxpayers. However, in 2011-12 the number of cases conceded by taxpayers increased to 26 from 18 in 2010-11, which was partly due to 7 associated cases. The ATO, it increased to 16 from 3 in 2010-11, which was partly due to concessions in 3 associated cases. See figure 2.2.

    Most appeals concern income tax assessments. This was 76% of litigation in progress in 2011-12. See figure 4.2.

    Other appeals in the courts in 2011-12 involved:

    • goods and services tax (16%)
    • superannuation (7%)
    • excise (1%).

    At the end of 2011-12, court cases represented 19% (176) of litigation matters in progress, of which 10% (18) were appeals to the Full Federal Court and less than 3% (5) were appeals to the High Court. See table 1.1.

    The declining number of court cases in recent years reflects the finalisation of mass-marketed scheme-related cases. In 2008-09, mass-marketed scheme-related cases represented 25% of all court decisions - however, this dropped to just over 4% in 2011-12.

    Between 1 July 2007 and 30 June 2012, there were 329 decisions by the courts, of which 184 (56%) were favourable to the ATO, and 121 (37%) were favourable to taxpayers. This trend was reflected in 2011-12, where there were 35 (51%) favourable decisions to the ATO, compared to 26 (38%) favourable to the taxpayer.

    Partly favourable decisions have consistently ranged between 10% and 15%, except in 2008-09 when it was 3%. In 2011-12, 8 (11%) cases were partly favourable to both parties. See figure 4.3.

    Trends 1 July 2007 to 30 June 2012

    Figure 4.1 Summary of trends

    Figure 4.1 Summary of trends

    Figure 4.2 Stock on hand by revenue product (GST and excise are combined as excise is less than 10 cases per financial year)

    Figure 4.2 Stock on hand by revenue product (GST and excise are combined as excise is less than 10 cases per financial year)

      Last modified: 15 Feb 2013QC 26462