Test case litigation

Usually taxpayers fund their own litigation. However, where a case raises issues of uncertainty or contention about how the tax and superannuation laws operate, we may provide financial assistance to these taxpayers. This is because clarifying these issues may be of benefit to the community.

Test case applications

The number of applications submitted for test case funding has been relatively consistent over the years. In 2013, the test case litigation program introduced new processes in order to identify more test cases.

Test case litigation panel

The test case litigation panel assesses applications and recommends cases for funding. In 2012-13 the members of the panel were:

  • Hon Kevin Lindgren AM QC (former Judge of the Federal Court of the Australia)
  • Peter Poulos – Partner, Maddocks Lawyers
  • Graeme Wade – Consultant, Hamilton Morello Accountants
  • Andrew England – Chief Tax Counsel and Chair, ATO
  • Peter Chochula – Senior Assistant Commissioner and Deputy Chair, ATO

Funding decisions

Twenty seven applications were considered for test case funding by the panel. Of these six were approved, four were approved on a conditional bases and 17 were declined.

The reasons for declining the 17 funding requests included:

  • The case was not of significance to a substantial section of the public.
  • There was no uncertainty or contention about how the law operates and the case was likely to be determined by applying established legal principles to the facts of the case.
  • The applicant was attempting to gain a benefit clearly not intended by the law.

The Chair also considered three cases without reference to the panel.

Under the test case program existing litigation cases are regularly reviewed to determine whether a taxpayer satisfies our funding criteria. In 2012-13 the Chair approved two cases without the taxpayer submitting an application.

An additional application was considered by the Chair on the basis that an urgent funding decision was required by the applicant. It was declined on the basis that the application did not meet the test case funding criteria.

Outcome of cases that received test case funding

In 2012-13 decisions were made in nine cases where test case funding was supplied. Of these, four were favourable to ATO and three were unfavourable. All of the decisions clarified the law.

There were two cases with test case funding that did not proceed and were finalised prior to a hearing. One was conceded by the ATO and the other was settled.

    Last modified: 19 May 2014QC 40198