When to consider applying for a class ruling
You should consider applying for a class ruling when you need advice on the tax consequences of a scheme for a specific class of people – for example, when:
- an employer seeks advice on the tax consequences of retention bonuses for a particular class of employee
- an employer seeks advice on the tax consequences of a bona-fide redundancy plan for a particular class of employee
- an employer seeks advice on the tax consequences of an employee share acquisition plan for individual employees
- a company seeks advice on the tax consequences for its shareholders of a restructure, a split or consolidation of its shares
- a public company seeks advice on the application of the scrip-for-scrip rollover provisions to its shareholders
- a Commonwealth, state, or territory government or authority seeks advice on a proposed transaction, such as an industry restructure that has tax consequences for the industry participants.
We don't issue class rulings in relation to investment schemes and similar products because product rulings are issued for this purpose.
Conditions for issuing class rulings
The issue of a class ruling for a particular scheme is generally conditional on the applicant:
- acknowledging that we'll reveal in the ruling:
- the name of the entities involved as principals in carrying out the scheme
- the name and description of the scheme
- a description of the agreements, deeds and transactions to which the participants are parties
- obtaining express consent to be named from all parties named in the ruling
- verifying that the description of the scheme contained in the proposed ruling is accurate.
Terms we use in relation to class rulings
- Scheme is a general term we use to refer to any agreement, arrangement, understanding, plan, proposal, action, course of action or course of conduct, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings.
- Entity is a general term we use to refer to a person, body corporate, body politic, partnership, any other unincorporated association or body of persons, trust or superannuation fund.
- The principal is the entity who carries out the specified scheme or arrangement – such as an employer seeking advice for a class of employee. A principal can also be a participant in the scheme.
- The applicant is the entity who applies for a class ruling on behalf of the principal, the participants, or the potential participants in the scheme. They can be a tax agent who acts on behalf of the principal or participants.
- The participant is the entity within a specified class who enters into a scheme or arrangement as described above.
One of the participants can represent the class of entities in its dealing with the tax agent who will apply for the class ruling. The representative participant will need authorisation from all the other class of entities before they can act on their behalf.
You should consider applying for a class ruling when you need advice on the tax consequences of a scheme for a specific class of people, such as employees or shareholders.