Court litigation

At a glance

About 20% of taxpayers seeking independent review of ATO decisions appeal to the court, see figure 4.1. Court cases also include appeals by taxpayers or the ATO from tribunal decisions, or from initial court decisions to higher courts.

Most appeals concern income tax assessments, 72% of litigation in progress in 2010-11, see figure 4.2.

In the same year other litigation in the courts involved:

  • goods and services tax (14%)
  • superannuation (11%)
  • fringe benefits tax (<1%)
  • excise (<1%).

At the end of 2010-11, court cases represented 25% (nearly 270) of litigation matters in progress, of which 3% (36) were appeals to the Full Federal Court and less than 1% (7) were appeals to the High Court, see figure 4.2.

The declining number of court decisions in tax and superannuation matters in recent years reflects the finalisation of mass-marketed scheme-related cases, see figure 4.3. In 2008-09, mass-marketed scheme cases represented 20% of all court decisions - there have been no cases related to mass-marketed schemes so far this year.

Taxpayer appeals to courts settled prior to hearing peaked at 86% in 2009-10 due to the high level of mass marketed scheme-related settlements, see figure 2.2. The ATO conceded a significant number of cases in 2007-08, 51 cases, or 37% of cases finalised pre-hearing. Since then, only very small numbers of cases have been conceded by either the ATO or taxpayers, with taxpayers conceding more cases than the ATO, see figure 2.2.

The most common reason for the ATO conceding a case is that fresh information has been provided by the taxpayer. This indicates improved communication between tax officers and taxpayers and their advisors earlier could further minimise disputes and resolve them earlier.

Between 1 July 2007 and 29 February 2012, there have been 282 decisions by the courts, of which 159 (56%) were favourable to the ATO, 95 (34%) were favourable to taxpayers and 28 (10%) were partly favourable to each party, see figure 4.3.

In the past 18 months, decisions favourable to the ATO and favourable to taxpayers has evened. In 2010-11, 21 (46%) were favourable to the ATO and 17 (38%) were favourable to taxpayers. So far this year, the number of favourable decisions to the ATO and taxpayers were even: 10 cases (46%) each.

Partially favourable decisions have ranged between 10% and 15% except in 2008-09 which was exceptionally low, with 2 cases (3%).

Trends 1 July 2007 to 29 February 2012

Figure 4.1 Summary of trends

Figure 4.1 Summary of trends

Figure 4.2 Stock on hand (GST and excise are combined as excise is less than 10 cases per FY)

Figure 4.2 Stock on hand (GST and excise are combined as excise is less than 10 cases per FY)

Figure 4.3 Decision results

Figure 4.3 Decision results

    Last modified: 30 Apr 2012QC 25889