The facts about product rulings

How does the Tax Office have power to make product rulings?

A product ruling is a type of public ruling under the provisions contained in Part IVAAA of the Taxation Administration Act 1953. Each product ruling is made in relation to a class of persons - those who invest in the product - on specified tax laws (that is, a section or other provision under which tax liability is worked out), and in relation to a specified arrangement (all the details, agreements constituting the product). Public rulings are binding on the Commissioner.

The Commissioner rules on the application of the tax laws to the defined arrangement for the 'class of persons' involved.

A public ruling is not made - and does not become binding - until it is published and notice of the ruling is given in the Gazette.

A ruling is binding only in relation to the arrangement ruled upon. If the arrangement actually carried out is materially different to the arrangement described in the ruling, then the ruling has no effect. A material difference is one where it would be concluded that a different tax consequence would flow from the change. In these circumstances, action may be taken by the Tax Office to disallow any deductions that were claimed in reliance on the ruling.