Applying for a product ruling
To make the application process as efficient and fast as possible, there are some simple things you can do:
- contact us for advice - we have checklists to help you provide all the information we need to consider your application
- use the appropriate ruling checklist
- provide all information up front
- explain complex issues in full
- lodge the completed checklist with your application, indicating on the checklist where we can find the relevant information on your application.
Providing all information
All questions must be answered honestly and completely. We won't rule if you provide insufficient information. We need to understand an arrangement and analyse the information provided before we rule. Rulings are not provided on the basis of similarities to other published rulings – all ruling requests are assessed on their own merits.
We'll request further details if you provide insufficient information. It's in your interest to make a full disclosure at the earliest possible time to avoid delaying the application process. If we don't receive all of the necessary information we may refuse to rule.
Frequently adding or updating material to support your request can cause delays. You can avoid this by providing a complete application. We'll only process your application if you've made a serious attempt to provide all necessary information. Any revision of arrangements or submission of additional material, whether requested by us or not, will be treated as a fresh application, made at the time the revised or additional material is received.
Explain complex issues
Product ruling arrangements can be very complex. Having worked on the development of your product, you no doubt understand the arrangement you propose. However, before we can issue a product ruling we also need to fully understand the arrangement.
We'll meet with applicants to discuss the arrangement whenever practicable, but we suggest that you explain the arrangement in your application as simply as possible. This will minimise the time it takes for us to understand your product.
What you can expect from us
We acknowledge your product ruling application within five working days of it being allocated to a case officer (who will advise you of their contact details).
We then review the application and contact you for more information if necessary. Where an application is incomplete (in accordance with the application checklist), we'll advise you that it's invalid and that we can't work on it until you provide this information.
We aim to finalise applications in the shortest time possible. However, the actual turnaround time depends for the most part on the quality of the application, the level of disclosure, and the time at which all relevant information is available to us. If time is an important factor, it's imperative that ruling requests be received in sufficient time to allow the request to be processed. Often, the process will involve ongoing discussion between our staff and the applicant.
What if the ATO rules unfavourably?
A ruling will only be published if the applicant agrees. In reality, this means that an unfavourable ruling is unlikely to be issued.
In any event, we’re more likely to refuse to rule if the outcome is unfavourable, as the existence of a ruling, even in unfavourable terms, might be misleading to potential investors.
Can I challenge ATO views on my product?
While product rulings are not covered by the objection and appeal provisions, if you wish to challenge our decision on a ruling application, we'll agree to issue a private ruling in response to a valid private ruling application. Such a private ruling is then subject to challenge in the usual way.
General anti-avoidance rule in Part IVA
We rule on the tax laws to the extent requested in an application, and this may include the general anti-avoidance provisions in Part IVA of the Income Tax Assessment Act 1936. Part IVA protects the integrity of our income tax system by ensuring that arrangements contrived to obtain tax benefits will fail.
While ruling on a prospective transaction, as is the case with a product ruling, presents special challenges (see Bellinz Pty Ltd & Ors v. FC of T 98 ATC 4634; (1998) 39 ATR 198), in the interests of certainty, we will rule on the application of Part IVA.
However, in order to provide the certainty of a legally binding ruling, we need to be specific about the arrangement we're ruling on and we'll describe it in depth in a product ruling.
If you seek a ruling on Part IVA, your application must properly address those provisions with an emphasis on the factors relevant to determining dominant purpose.
If we're not able to give a positive Part IVA clearance, we will refuse to rule. A qualified Part IVA ruling provides no certainty and could be misleading to potential participants/investors.
If requested, we will also rule on other avoidance rules such as section 82KL and section 82KZM.
Contact us for advice on how to lodge a product ruling application. We have checklists to help you provide all the information we need to consider your application.