The ATO says it can help fund your client’s reasonable litigation costs if the outcome of their case will affect a significant number of taxpayers by: Funding litigation costs for tax cases
- clarifying the law, and/or
- developing legal precedent.
Its test case litigation program was established to fund cases that have broader implications beyond individual disputes with the ATO. The program can provide financial assistance to taxpayers to help them meet some or all of their reasonable litigation costs and – in limited circumstances – pre-litigation costs, associated with clarifying tax, superannuation and in some instances debt-related issues.
A test case litigation panel considers applications for funding. The panel’s chair and deputy chair are senior ATO officers, and external members are from the legal and accounting professions.
In certain instances, cases will be considered for funding without an application being submitted. These cases will generally be considered separately by the chair or deputy chair of the panel.
The sort of case that may be considered will be expected to be in the public interest. Funding will be considered where, in addition to meeting the test case funding criterion:
- your case must have significance to a substantial section of the public or have significant commercial implications for an industry
- this means that there should be a number of taxpayers affected or there are industry and or community views that the issue is uncertain or contentious.
- you must demonstrate a willingness to progress the dispute in a timely manner
- the ATO expects taxpayers who are approved for funding to cooperate with it to avoid delays and to progress cases in a timely manner – any indication that this may not occur (based on past or current behaviour) will be considered before an application is approved for funding
- your case must be likely to provide legal precedent
- legal precedent means a decision that establishes a principle of law that is capable of being used to decide other cases with similar facts – a precedential decision will provide certainty and clarity for taxpayers – in some instances, the program will consider funding cases before the Administrative Appeals Tribunal, particularly if the case is to be heard by a presidential member
- your case must not involve a tax avoidance scheme unless it tests the proper meaning of anti-avoidance provisions
- there are many different types of tax avoidance – funding will only be considered for tax avoidance schemes where it tests the meaning of those laws
- your case must not appear to be an attempt to gain a benefit not intended by the law – this includes cases where there is an attempt to seek a windfall gain or an outcome contrary to the intent of the legislation and public policy
- funding is not usually provided where the outcome you seek is clearly not an outcome intended by the law.
Tax agents or their clients can apply online, and the panel will consider their case against the funding criterion and expectations.
To make an application for funding you need to fill in the test case funding application form, however it is recommended that you read the information under the test case litigation register before submitting an application.