The Australian Tax Office (ATO) has seen its legal fee expenditure increase by more than A$8 million in the past financial year.

The ATO spent a total of A$59.5 million on external legal fees in the 2012 financial year, in addition to A$36.3 million on internal legal fees, bringing it to a total of A$96.3 million. The taxation office put the increased legal expenditure down to an increased number of cases and the “complexity of cases”.

However, despite the soaring legal fees, the ATO managed to recoup only A$3.5 million in the 12 months to June 2012. This is despite the ATO recording a win in 50 percent of cases that were finalised in the Federal Court during the 2012.  “While we have a good success rate with litigation overall, some court cases where we were not successful involved substantial amounts of revenue or strategically important issues of law interpretation,” stated the ATO’s annual report. 

From 1 July 2008 until 30 June 2012 there were 17 decisions of the High Court where the ATO Commissioner was a litigant. The Commissioner was successful in seven of those cases. Based on its own analysis, 11 decisions (65 percent) clarified the law and five (29 percent) resulted in the government announcing law change. Of those, 47 percent were funded under the ATO test case funding program.

Related stories:

ACCC legal fees increase to A$26.2m 2 November 2012


AG’s drops spend, but Ashurst doubles its share 1 November 2012