5. High Court
At a glance
Litigation trends in the High Court have been a topic of significant interest recently. Concerns have been raised about the ATO's 'track record' and whether the ATO is taking the right cases to court or continuing with some disputes unnecessarily. This is a very important issue for two reasons, the cost implications for particular taxpayers; and as the final court of appeal it is important that only the most significant issues are brought before it. Since 1 July 2008, there have been 17 High Court decisions on taxation and superannuation cases, of which 7 (41%) were favourable to the ATO, including those related to constitutional challenges and precedential debt litigation.
Special leave applications
We have analysed recent trends in applications made for special leave applications (SLA) in taxation and superannuation litigation cases to the High Court. This has tested whether the ATO is unnecessarily requiring taxpayers to contest special leave applications following decisions that are not in the ATO's favour in lower courts.
Since 1 July 20088, 44 special leave applications have been determined. The majority of applications were filed by the taxpayer 27 (61%), of which 8 (30%) were successful, whereas the ATO made 16 (37%) applications, of which 7 (44%) were successful. 1 (2%) successful application was filed by both parties.
High Court trends
In analysing decision trends, it is important to not simply count up 'who wins'. About half the decisions by the High Court since 1 July 2008 (8 out of 17) were related to test cases. These cases were funded by the ATO in the High Court to resolve contentious issues and areas of uncertainty in law interpretation that are of significant community interest. Accordingly, we would not anticipate the rate of cases favourable to the ATO to be as high among this group compared to other types of litigation.
Successful outcomes should be measured in terms of the impact of decisions - that is, the extent to which uncertainty is resolved. Of the 17 decisions:
- 11 (65%) clarified the law
- 5 (29%) resulted in government-announced policy or law change to provide certainty
- 1 (6%) concerned facts where jurisdictional error was at issue. See figure 5.2.
Another important insight is how often the High Court overturns judgments made by lower courts. Since 1 July 2008, this has occurred in 8 cases (47%).
This analysis of both High Court decisions and special leave applications demonstrates that the taxation and superannuation litigation program is achieving the objective of supporting law clarification for significant and contentious issues.
Figure 5.1 Success rate of special leave applications to the High Court
Figure 5.2 High Court outcomes