Question

Discuss the ATO’s ‘Test Case Litigation Program’

Answer in around 300 words

ps: require plagiarism free answer

Answer 1

The Test Case Litigation Program provides financial assistance to taxpayers to help them meet some, or all, of the reasonable litigation costs for ATO-law related cases that meet specific funding criteria and expectations.

Criteria :

For a case to be approved for funding, the case must:

• involve issues where there is uncertainty or contention about how the law operates
• be in the public interest to be litigated.

Uncertainty or contention about how the law operates means that the law is ambiguous with little or no judicial clarification on the issue, or there is disagreement on what the law means or how it operates. It does not include disputes that depend solely on questions of fact.

Expectations :

In addition to meeting the funding criteria, the case must have either:

• significance to a substantial section of the public
• significant commercial implications for an industry.

This means there should be a number of taxpayers affected, or there are industry or community views that the issue is uncertain or contentious.

• You must demonstrate willingness to progress the dispute in a timely manner by cooperating with us to avoid delays. Any indication that this may not occur (based on past or current behaviour) will be considered before an application is approved.
• Your case must be likely to provide legal precedent as a principle of law, capable of being used to decide other cases with similar facts, giving certainty and clarity for taxpayers.
• Your case must not involve a tax avoidance scheme unless it tests the proper meaning within the legal framework of the anti-avoidance provisions.
• Your case must not appear to be an attempt to gain a windfall or an outcome contrary to the intent of the legislation and public policy.

Reinvention of Program :

On 21 January 2016, the ATO advised the Dispute Resolution Working Group members of the results of the ‘reinvention’ of the Test Case Litigation Program. It said, that in the last 12 months they have:

• Reduced our test case funding criteria from three criteria and 9 guiding principles to 1 criterion and 5 expectations
• Introduced new online application forms making it easier to apply for test case funding
• Introduced a new policy to approve funding via the panel without an application form
• Increased the number of ad hoc panel meetings to cater for time sensitive applications
• Increased transparency about our panel process by proving details about our panel members online
• Reduced the ATO’s time to review a declined funding decision from six to two weeks.
• Streamlined our costs policy to give applicants greater awareness about levels of reimbursement, timely cost payments and consistency of funding arrangements
• Published the Test Case Litigation Register after each Panel meeting
• Launched new online content so that it is shorter, clearer and easier to understand
• Re-issued the Test Case Guide
• Introduced a new feedback mechanism to ensure continuous improvement.

Some other things included are as follows :

• The role of objections in the legal process and the work required to ensure the objections
are correct is not recognised by the ATO Test Case Litigation Program (‘Program’). The
costs involved in preparing objections should be included in the Program, especially where
it is appropriate lawyers or counsel are used to draft the objection.

• It is unclear from the booklet how ‘tax avoidance schemes’ will be determined for the
purposes of the Program. It should be made clear that those schemes, which test the
proper meaning of anti-avoidance provisions or where there is a strong public interest, will
receive funding.

• Further guidance needs to be provided on the decision making process including
information on timing of meetings, what funding covers and the circumstances under
which the chair of the Test case Litigation Panel may overturn a funding recommendation.

• An applicant should have the opportunity to see and respond to any written comments
from within the Tax office, which are to be provided to the Test Case Litigation Panel.

• The disbursements covered by the Program should include the cost of engaging an expert.

• The booklet should clarify whether any previous funding must be refunded where the Tax
Office terminates funding.

• A client should not be subjected to the cost of preparing a bill in taxable form in all cases.

• Any appeal rights when a funding application is declined should be included in the booklet.

• The criteria for determining the ‘merits of the case’ should be clarified in the booklet.

Examples of the submission required to be presented with the material for the Test Case
Litigation Panel should be included in the booklet.