Small business litigation funding

Who is eligible?

The ATO is committed to supporting small business to manage their disputes with us in the Administrative Review Tribunal (tribunal).

If you're a small business in dispute with the ATO in the tribunal, you may be eligible for litigation funding of your reasonable legal expenses under the Small Business Litigation Funding program if the following criteria and expectations are met.

Criteria

You must meet the following 3 criteria to apply for funding:

• You're a small business (sole trader, partnership, company, or trust). This means for the year in dispute you
  • operated a business for all or part of the income year; and
  • had a turnover less than $10 million.
• The tribunal confirms
  • the dispute is in the Taxation and Business jurisdictional area and is in relation to a 'small business taxation decision' as defined in the Administrative Review Tribunal Rules 2024
  • you are not, and have not been, legally represented in the tribunal in the dispute.
• The ATO has engaged external legal representation in the tribunal dispute. The date the ATO decides to engage external legal representation is the date your eligibility for funding starts.

Expectations

Once the criteria have been met, the ATO will consider your application for funding.

We will need to be satisfied of the following:

• The legal representative chosen by the small business must not be a related party to that small business to avoid conflict-of-interest issues. Examples of related parties are a legal representative who is
  • a director or shareholder of the small business
  • a family member of a director or shareholder of the small business.
• The matter must not involve
  • a tax avoidance scheme
  • a scheme to avoid superannuation regulatory provisions
  • fraud or evasion where a formal finding has been made by the Commissioner. This will usually be stated in the reasons for decision issued to you by the ATO
  • cash economy issues, or
  • illegal activities or conduct that is criminal in nature.
• The matter must not appear to be an attempt to gain a windfall or an outcome contrary to the original intent of the legislation or public policy.
• The taxpayer must not have a history of failing to lodge returns on time, or failing to respond to informal or formal requests made by the Commissioner for information.
• The taxpayer’s directors must not have a history of engaging in phoenix activity.
• The taxpayer, or its directors, must not be subject to any insolvency or bankruptcy process either currently or in respect of the taxation years before the tribunal.
• The ATO’s decision to engage counsel must not be due to abusive or inappropriate conduct on the part of the taxpayer or an associate towards ATO or tribunal staff.

In addition to the criteria and expectations, the small business and their legal representatives, must demonstrate their willingness to progress the dispute in a timely and efficient manner to avoid delays. Any indication of a lack of such willingness (based on past or current behaviour), may result in the cessation of funding unless a different legal practitioner is engaged.

If you're eligible for small business litigation funding and accept our offer, you'll be given a funding deed containing the terms for funding. You and an ATO representative will need to sign the deed before small business litigation funding can start.

Funding under the program may cover some or all of your reasonable legal costs related to progressing a funded tribunal matter. It doesn't cover tax agent or accountant fees and is paid at the discretion of the ATO.

Contact us

For more information about small business litigation funding:

• Phone 13 28 69 between 8:00 am and 5:00 pm Monday to Friday and ask for the Test Case Litigation Program
• Email ATOLitigationFunding@ato.gov.au
• Write to:
  Small Business Litigation Funding
  Australian Taxation Office
  GPO Box 4889
  SYDNEY  NSW  2001

If you don't speak English well and need help from us, phone the Translating and Interpreting Service on 13 14 50.

If you're deaf or have a hearing or speech impairment, phone us through the National Relay Service (NRS) on the following numbers and ask for the ATO number you need:

• TTY users, phone 13 36 77
• Speak and Listen (speech-to-speech relay) users, phone 1300 555 727
• internet relay users, connect to the NRSExternal Link.