House of Representatives

Tax Laws Amendment (Improvements to Self Assessment) Bill (No. 2) 2005

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello MP)

Glossary

The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation Definition
ANTS Tax Reform: not a new tax, a new tax system
ATO Australian Taxation Office
Commissioner Commissioner of Taxation
ITAA 1936 Income Tax Assessment Act 1936
ITAA 1997 Income Tax Assessment Act 1997
SPOR shorter period of review
STS simplified tax system
TAA 1953 Taxation Administration Act 1953
the Report Report on Aspects of Income Tax Self Assessment
the Review Review on Aspects of Income Tax Self Assessment

General Outline and Financial Impact

General Outline

Amendment of assessments

Schedule 1 to this Bill amends the Income Tax Assessment Act 1936 to make a number of changes to reduce the periods during which the Commissioner of Taxation (Commissioner) may amend income tax assessments in a range of circumstances.

The period in which the Commissioner can amend an assessment for most individuals or very small business taxpayers will be standardised at 2 years. A 4-year amendment period will apply for taxpayers with more complex affairs.

Date of effect : These amendments will apply to amendments of assessments for the 2004-05 income year and later years.

Proposal announced : These amendments were announced in the Treasurer's Press Release No. 106 of 16 December 2004 as part of the Government's response to the Report on Aspects of Income Tax Self Assessment.

Financial impact : The revenue impact of the amendments is expected to be:

2005-06 2006-07 2007-08 2008-09
Nil Nil -$11 million -$17 million

Compliance cost impact : This measure will bring earlier finality to the tax affairs of a large number of taxpayers.

ATO advice

Schedule 2 to this Bill amends the Income Tax Assessment Act 1936 and the Taxation Administration Act 1953 to implement a new framework for Australian Taxation Office (ATO) advice.

This Bill replaces the existing provisions on rulings entirely. It expands the circumstances in which the Commissioner can give legally binding advice (a ruling) to cover matters of administration, collection, and ultimate conclusions of fact, and establishes a procedure for taxpayers to obtain private rulings about valuation issues.

This Bill also ensures that taxpayers will obtain protection from interest charges (similar to current penalty protection) where they rely on ATO advice that is not a ruling or administrative practice.

Date of effect : These amendments will apply from 1 January 2006 or Royal Assent, whichever is the later.

Proposal announced : These amendments were announced in the Treasurer's Press Release No. 106 of 16 December 2004 as part of the Government's response to the Report on Aspects of Income Tax Self Assessment.

Financial impact : The revenue impact for the measure is unquantifiable, but expected to be minimal.

Compliance cost impact : This measure will have a positive affect on the responsiveness and confidence in the reliability of ATO advice. Taxpayers are not expected to incur additional compliance costs as a result of the proposed changes, except in circumstances where they apply for private rulings involving a valuation issue.

Summary of regulation impact statement

Regulation impact on business

Impact : The amendments to the existing law reduce the periods allowed for the Australian Taxation Office (ATO) to amend a taxpayer's liability in a wide range of situations and provide a better framework for the provision of ATO advice by introducing ways to make that advice more accessible, timely, and binding in a wider range of cases.

Main points :

·
This measure introduces a standard amendment period of 2 years for taxpayers with simple affairs, including most individuals and very small business taxpayers. The amendment period for other taxpayers, such as taxpayers with complex affairs and large businesses, generally remains at 4 years. The amendment period for loss and nil liability returns will be made the same as for a return incurring a positive liability.
·
The amendment period for assessments where a taxpayer has sought a scheme benefit in relation to income tax (including where Part IVA of the Income Tax Assessment Act 1936 is invoked) will be 4 years.
·
The unlimited amendment period for cases of fraud or evasion will continue to apply.
·
The new law will provide improved ways for taxpayers to find out the Commissioner of Taxation's (Commissioner's) view on how certain laws apply, so that the risks of uncertainty when self assessing, or working out their tax obligations or entitlements, are reduced. This is achieved by:

-
making rulings available to many taxpayers on a wide range of matters;
-
ensuring that the Commissioner provides rulings in a timely manner;
-
enabling the Commissioner to obtain, and make rulings based on, relevant information;
-
protecting taxpayers from increases in tax and from penalties and interest where they rely on rulings;
-
limiting the ways the Commissioner can alter rulings to a taxpayer's detriment; and
-
giving protection from interest charges where a taxpayer relies on other advice from the Commissioner, or on the Commissioner's general administrative practice.

Chapter 1 - The Report on Aspects of Income Tax Self Assessment

Outline of chapter

1.1 This chapter summarises the self assessment system for income tax and explains the background to the Report on Aspects of Income Tax Self Assessment (the Report) that recommended the changes proposed in this Bill.

The self assessment system

1.2 Since 1986 -87, income tax in Australia has operated under a self assessment system. Before self assessment, taxpayers were obliged by law to make a 'full and true disclosure' of the relevant information to the Australian Taxation Office (ATO) to permit the ATO to apply the law to their circumstances - in other words, assessment of taxpayers' liabilities was performed by the ATO.

1.3 Under the self assessment system, taxpayers' returns are generally accepted at face value, subject to post -assessment audit or other verification by the ATO. Under this system, while the ATO issues notices of assessment to create the formal obligation to pay tax, a taxpayer's statement in their return is taken to represent their view about how the law applies to their circumstances.

1.4 In 1989 -90, the returns of companies and superannuation funds became subject to a system of full self assessment, under which the taxpayer calculates their liability and pays their tax when lodging their return. The ATO does not issue notices of assessment to these taxpayers.

1.5 For both individuals and full self assessment taxpayers, the ATO may review and amend an assessment within a prescribed period.

1.6 The self assessment system was modified in 1992 by the Taxation Laws Amendment (Self Assessment) Act 1992 to include a system to permit the ATO to issue binding public and private rulings, a regime of penalties for understatements of income tax liability, an extension of the period within which a taxpayer could object against an assessment, and a system of interest for underpayments and late payments of income tax.

The Review of Aspects of Income Tax Self Assessment

1.7 On 24 November 2003, the Treasurer announced the Review of Aspects of Income Tax Self Assessment (the Review) in Press Release No. 98. The purpose of the Review, which was conducted by the Treasury, was to determine whether the self assessment arrangements struck the right balance between protecting the rights of individual taxpayers and protecting the revenue for the benefit of the Australian community.

1.8 In March 2004, the Government released a discussion paper that examined this balance in light of a number of aspects of Australia's income tax self assessment system and comparable international arrangements. In response to the discussion paper, the Review received over 30 formal submissions, plus numerous phone calls, emails and background papers from interested parties, and held face to face consultation with taxpayer representatives, professional bodies and other government agencies.

1.9 On 16 December 2004, the Treasurer announced the Government's response to the Report and released the Report to the public in Press Release No. 106. The Report identified a number of refinements to the self assessment system to reduce uncertainty for taxpayers, while preserving the ATO's capacity to collect legitimate income tax liabilities. The Treasurer announced that the Government would adopt the 30 legislative recommendations made in the Report, and that the Commissioner of Taxation had advised the Treasurer that the ATO would implement the administrative recommendations as soon as practicable.

Implementing the legislative recommendations in the Report

1.10 This Bill implements the second part of the Government's legislative response to the Report, by amending the existing law to reduce the periods allowed for the ATO to amend a taxpayer's liability in a wide range of situations and establishes a new regime for ATO advice.

1.11 The amendment periods for most taxpayers will be shortened from 4 to 2 years, with the exception of large business taxpayers and taxpayers with complex tax affairs. The period for amendments relying on anti-avoidance provisions will be reduced from 6 to 4 years.

1.12 The advice and rulings provisions expand the scope for ATO advice, expand the number of products by which the ATO can be bound and give taxpayers more protection from primary tax, interest and penalties than the existing regime.

1.13 In its response to the Report, the Government also announced that improvements would be made to mitigate the interest and penalty consequences of taxpayer errors arising from uncertainties in the self assessment system. The amendments to implement these improvements were contained in the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 1) 2005, which received Royal Assent on 29 June 2005.

Chapter 2 - Amendment of assessments

Outline of chapter

2.1 Schedule 1 to this Bill amends the Income Tax Assessment Act 1936 (ITAA 1936) to make a number of changes to reduce the periods during which the Commissioner of Taxation (Commissioner) may amend income tax assessments in a range of circumstances. The period in which the Commissioner can amend an assessment for most individuals or very small business taxpayers will be standardised at 2 years. A 4-year period of review will apply for taxpayers with more complex affairs.

2.2 The period for review and amendment of assessments involving arrangements with a dominant tax avoidance purpose will be 4 years. This will reduce the amendment period where the general anti-avoidance provision (Part IVA) applies from 6 years and also apply to other cases with a dominant tax avoidance purpose.

2.3 Where a taxpayer returns a nil tax liability for an income year, the taxpayer will now have a limited period of review - either 2 or 4 years, depending on the complexity of their affairs - rather than an unlimited period of review, as is presently the case.

2.4 This Bill also restructures and redrafts section 170 of the ITAA 1936, which is the main provision covering amended assessments. A number of provisions have been converted to tables.

Context of amendments

2.5 These provisions have been developed as part of the Government's response to the recommendations made in the Report on Aspects of Income Tax Self Assessment (the Report). Background to the Report, and the recommendations made, is in Chapter 1 of this explanatory memorandum.

Operation of current provisions

2.6 Currently, the standard period for the Commissioner to amend an assessment is 4 years. If the underassessment of tax was due to fraud or evasion, the Commissioner can amend the assessment at any time. The Commissioner has 6 years to amend an assessment to give effect to a Part IVA determination to cancel a tax benefit (section 177G of the ITAA 1936). Certain special circumstances described in the legislation also give rise to unlimited review periods (see paragraph 2.13).

2.7 For certain individuals with very simple tax affairs, called shorter period of review (SPOR) taxpayers (the definition of SPOR taxpayers is contained in section 6AD of the ITAA 1936), the current period for amendment is 2 years.

2.8 Where the amendment is initiated by the taxpayer the time limits outlined above generally also apply. The Commissioner can rely on a statement by a taxpayer in making an amendment to increase or decrease a liability (commonly called a 'self amendment'), in the same way the Commissioner can rely on a statement in a return (subsection 169A(1)). If the Commissioner does amend an assessment relying on a taxpayer's request, then the amendment period with respect to that particular is refreshed.

2.9 The time limits for lodgment of objections against assessments correspond to the periods for amendment of assessments (section 14ZW of the Taxation Administration Act 1953). Taxpayers can request the Commissioner to deal with objections lodged outside those time limits as if they had been lodged within time (subsection 14ZW(2)). The Commissioner must consider the request and decide whether to agree to it or refuse it (subsection 14ZX(1)).

2.10 If a taxpayer applies for an amendment of their assessment before the period for amendment ends, and has supplied to the Commissioner all information necessary for deciding the application, amendment is allowed even though the period for amendment has elapsed (subsection 170(6) of the ITAA 1936).

Nil liability (including loss) returns

2.11 For individual taxpayers, the time periods for amendment currently start to run when tax becomes due and payable under an assessment. Therefore, if a taxpayer has a nil liability or a loss in an income year so that no tax is 'due and payable', the Commissioner effectively has an unlimited period to review their affairs (subsection 170(2) of the ITAA 1936).

2.12 A recent Federal Court decision indicates that full self assessment taxpayers, such as companies and the trustees of approved deposit funds, eligible superannuation funds or pooled superannuation trusts, similarly face an unlimited review period when they lodge nil liability returns (FCT v BCD Technologies Pty Ltd
[2005] FCA 708).

Other unlimited periods of review

2.13 There are numerous specific provisions that have unlimited periods of review. The majority of these provisions are listed in subsections 170(10) and (10AA) of the ITAA 1936, but some are found in other parts of the tax laws or contained in legislation other than tax laws (eg, subsection 56(3) of the Child Support (Assessment) Act 1989).

Summary of new law

2.14 The purpose of these amendments is to ensure that the time during which taxpayers experience uncertainty over whether they have correctly self assessed their income tax liability approaches the minimum required for the Australian Taxation Office (ATO) to identify the majority of incorrect assessments of that type and correct them.

2.15 The Government has decided that the period during which the Commissioner may amend the assessment of an individual or very small business taxpayer to increase or decrease their tax liability should be reduced to 2 years. Taxpayers excluded from the 2-year amendment period will generally have a 4-year amendment period, unless a special amendment period applies.

2.16 A business will be treated as a very small business in any income year in which it is eligible for, and has elected to participate in, the simplified tax system (STS). The STS is dealt with in Division 328 of the Income Tax Assessment Act 1997 (ITAA 1997).

2.17 Taxpayers with more complex affairs, including businesses that are not in the STS, have a 4-year amendment period. This reflects the greater time generally needed for the ATO to complete compliance activity for this type of taxpayer. Therefore, the 2-year amendment period excludes:

·
a taxpayer that carries on a business (or is a partner in a business) that is not in the STS;
·
a taxpayer that is a beneficiary of a trust estate at any time in that income year, unless the trust is an STS taxpayer or the trustee of the trust (in that capacity) is a full self assessment taxpayer (eg, a corporate unit trust, public trading trust or superannuation fund);
·
a taxpayer if, in that year, that taxpayer or another entity entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the taxpayer obtaining a scheme benefit in relation to income tax from the scheme; and
·
other high risk and special cases prescribed by regulation.

2.18 Fraud or evasion cases will continue to have an unlimited amendment period, as people who engage in calculated behaviour to evade tax should remain permanently at risk.

2.19 The current powers to extend the standard amendment periods generally continue to apply, an example being the power of the Federal Court to extend time where the Commissioner has commenced an examination of a taxpayer's affairs.

2.20 The present 6-year amendment period for the Commissioner to give effect to Part IVA (the general anti-avoidance provision) and certain other anti -avoidance provisions is abolished. Schemes where someone entered into or carried out the scheme with a dominant purpose of the taxpayer avoiding tax will, like other complex cases, be subject to a 4 -year amendment period. This will not be limited to where Part IVA applies - it also applies where a scheme is defeated by any other provision, provided the relevant purpose is present.

2.21 From the 2004 -05 income year, the amendment period for loss and nil liability assessments will be the same as the period for assessments with positive liabilities. Transitional rules for taxpayers who lodged nil liability returns for earlier income years will enable those taxpayers to obtain finality for those earlier years.

2.22 Because these amendments significantly revise and update the former section 170 of the ITAA 1936, the whole section has been restructured and renumbered.

Comparison of key features of new law and current law

New law Current law
A majority of taxpayers have a 2 -year amendment period. Some classes of taxpayer are excluded from the 2 year period in the law and some cases are dealt with by the regulations. A majority of taxpayers have a 4 -year amendment period.
Taxpayers with more complex affairs have a 4-year amendment period. A majority of taxpayers have a 4 -year amendment period.
The shorter period of review (SPOR) class of taxpayer is no longer required. Shorter period of review (SPOR) taxpayers are entitled to a reduced amendment period.
Nil assessments (including loss cases) have a limited amendment period, of 2 or 4 years, depending on the circumstances of the taxpayer. Nil and loss returns have an unlimited review period.
The amendment period for avoidance arrangements, including where Part IVA applies, is 4 years. The amendment period for avoidance arrangements subject to Part IVA and certain other avoidance provisions is 6 years.
Normal amendment periods apply for substantiation and car expenses provisions. Substantiation and car expenses provisions have unlimited amendment periods.
The review period commences when the Commissioner gives the taxpayer the notice of assessment. The review period commences when an assessment becomes due and payable.

Detailed explanation of new law

A shorter standard amendment period

2.23 The majority of taxpayers will have their tax affairs for a particular income year finalised 2 years after the Commissioner gives them a notice of assessment for that income year.

Eligibility for the 2-year amendment period

2.24 Most taxpayers will be subject to the standard 2-year amendment period. A taxpayer will be excluded from the standard amendment period only if he or she has complex affairs and therefore fits within one of the categories of exclusion outlined in subsection 170(1). New items 1 to 3 of subsection 170(1) set up the standard period for taxpayers with simple affairs and item 4 deals with the default amendment period of 4 years. Items 5 and 6 of subsection 170(1) establish unlimited amendment periods for fraud or evasion and for giving effect to decisions on review or appeal, while subsections 170(9) to (10A) set out special amendment periods (other special amendment periods are currently found throughout the tax laws and other Acts).

Individual taxpayers

2.25 The Commissioner may amend the assessment of an individual taxpayer within 2 years after the day on which the Commissioner gave notice of the assessment, unless the individual:

·
carries on a business and is not an STS taxpayer for that year;
·
is a partner in a partnership that carries on a business that is not an STS taxpayer for that year;
·
is acting in the capacity of a trustee of a trust estate in that year (see paragraph 2.27 for special rules relating to this case);
·
is a beneficiary of a trust estate in that year, except where the trust is an STS taxpayer or the trustee of the trust (in their capacity as trustee) is a full self assessment taxpayer for that year;
·
or another person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of obtaining a scheme benefit in relation to income tax from the scheme for that year; or
·
is excluded from the 2-year period by regulation.

[Schedule 1, item 1, item 1 in the table in subsection 170(1)]

This 2-year time limit is subject to items 5 and 6, subsections 170(9) to (10A) and other special amendment periods found throughout the income tax laws and other Acts.

Companies

2.26 The Commissioner may amend the assessment of a company that is an STS taxpayer for the year of income of that assessment, within 2 years after the day on which the Commissioner gave notice of the assessment, unless the company:

·
is a partner in a partnership that carries on a business that is not an STS taxpayer for that year;
·
is acting in the capacity of a trustee of a trust estate in that year (see paragraph 2.27 for special rules relating to this case);
·
is a beneficiary of a trust estate in that year, except where the trust is an STS taxpayer or the trustee of the trust (in their capacity as trustee) is a full self assessment taxpayer for that year;
·
or another person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the company obtaining a scheme benefit in relation to income tax from the scheme for that year; or
·
is excluded from the 2-year period by regulation.

This 2-year time limit is subject to items 5 and 6, subsections 170(9) to (10A) and other special amendment periods found throughout the income tax laws and other Acts. Section 166A of the ITAA 1936 deems that the Commissioner is taken to have given notice of an assessment on the day on which the return is lodged.

[Schedule 1, item 1, item 2 in the table in subsection 170(1)]

Trustees

2.27 The Commissioner may amend the assessment of a trustee of a trust estate that is an STS taxpayer within 2 years after the day on which the Commissioner gave notice of the assessment, unless the trustee:

·
is a partner in a partnership that carries on a business that is not an STS taxpayer for that year;
·
is a beneficiary of another trust estate in that year, except where the trust is an STS taxpayer or the trustee of the trust (in their capacity as trustee) is a full self assessment taxpayer for that year;
·
or another person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the trust obtaining a scheme benefit in relation to income tax from the scheme for that year; or
·
is excluded from the 2-year period by regulation.

Item 3 is subject to items 5 and 6, subsections (9) to (10A) and other special amendment periods found throughout the income tax laws and other Acts.

[Schedule 1, item 1, item 3 in the table in subsection 170(1)]

Exclusion for avoidance schemes

2.28 As outlined above, an exclusion from the 2-year amendment period for avoidance cases applies to individuals, companies and trustees otherwise eligible for a 2-year amendment period. Avoidance cases are complex and therefore a 4-year amendment period is warranted.

2.29 For the exclusion to apply, it must be reasonable to conclude that someone entered into or carried out a scheme (not necessarily the taxpayer) for the sole or dominant purpose described. That purpose is for the taxpayer to obtain a scheme benefit in relation to income tax from the scheme for that income year and is objectively determined having regard to any relevant factors. The matters listed in section 177D of the ITAA 1936 provide guidance as to what is likely to be relevant in objectively determining the purpose. As in section 177D, a person's actual subjective purpose is not relevant.

2.30 Scheme benefit has the same meaning as in the scheme penalty provisions in Schedule 1 of the Taxation Administration Act 1953 (TAA 1953) and scheme has the same meaning as in those provisions and in Part IVA of the ITAA 1936.

2.31 The exclusion is not limited to cases where Part IVA applies - it can also apply where the benefit sought is unavailable because of any provision of the law, provided the relevant purpose is present.

2.32 Finally, the exclusion does not depend on whether the taxpayer is actually entitled to the benefit in question. If the necessary purpose is present, the longer 4-year amendment period applies, whether or not the taxpayer is entitled to the benefit.

Other exclusion by regulation

2.33 Because taxpayers' financial affairs are constantly evolving and from time to time new arrangements emerge, the law includes a mechanism by which sets of circumstances can be excluded from the standard amendment period by allowing for exclusion 'in any other circumstance prescribed by the regulations'. The Legislative Instruments Act 2003 restricts the retrospective application of regulations and provides for consultation on regulations affecting businesses. [Schedule 1, item 1, paragraph (f) in column 3 of item 1, paragraph (e) in column 3 of item 2 and paragraph (d) in column 3 of item 3 in the table in subsection 170(1)]

Determining whether the 2-year amendment period applies

2.34 Eligibility for the standard 2-year amendment period depends on the actual tax affairs of the taxpayer for that year, and not the taxpayer's or the Commissioner's understanding of the status of the affairs at the time of the assessment.

Example 2.1 George includes in his 2004-05 tax return his salary and a share of his interest in the net income of a partnership that he wrongly believes to be an STS taxpayer for that year. In 2008, the Commissioner adjusts the net partnership income and issues an amended assessment to George reflecting that adjustment. Although the amended assessment was issued more than 2 years after George received his notice of assessment, he is not eligible for the standard amendment period for 2004-05 because he is a partner in a partnership that was not a STS business.

Example 2.2 In her 2004-05 return, Rachael declares her salary and a distribution from a non-STS trust. Therefore, it appears that she is not eligible for the standard amendment period. Three years after she receives her notice of assessment for 2004-05, she discovers that the trust was an STS trust. Rachael is eligible for the standard amendment period for the 2004-05 income year.

The 4-year amendment period

2.35 A taxpayer that is not eligible for the standard 2-year amendment period will be subject to a 4-year amendment period, unless they fall within items 5 or 6, subsections 170(9) to (10A) or other special amendment period. Generally speaking, non-STS businesses, however structured, and individuals with complex financial affairs will fall into the 4-year amendment period, rather than the standard 2-year period. [Schedule 1, item 1, item 4 in the table in subsection 170(1)]

Exclusions from limited amendment periods

2.36 The provisions outlining eligibility for the 2 or 4-year amendment periods, as outlined above, are all subject to the following exclusions.

Fraud or evasion

2.37 The Commissioner can, as is presently the case, amend an assessment at any time if the Commissioner is of the opinion that there has been fraud or evasion. The omission of the phrase referring to 'an avoidance of tax' from the old paragraph 170(2)(a) is not expected to have practical significance. [Schedule 1, item 1, item 5 in the table in subsection 170(1)]

Unlimited amendment period to give effect to objection and appeal

2.38 The Commissioner has an unlimited period to give effect to a decision on a review or appeal, or as a result of an objection made by the taxpayer, or pending a review or appeal. [Schedule 1, item 6, section 170, subsection 170(1)]

Other unlimited amendment periods

2.39 Section 170 lists a number of provisions that are not subject to time limits. These are discussed in paragraphs 2.55 to 2.57.

Commissioner may amend an amended assessment

2.40 Every amended assessment is an assessment for all purposes of the income tax law, unless the law provides otherwise (section 173 of the ITAA 1936). This rule means that the Commissioner is able to amend an amended assessment. However, the amended assessment provisions ensure that, when the Commissioner amends an assessment, a fresh amendment period only arises for the particular that was amended.

2.41 The new provisions restructure and re-express the rules about amending assessments. They reflect the new shorter periods for amendments, especially the 2-year period applying to individuals and businesses in the STS, but otherwise work in the same way as the existing law.

2.42 The Commissioner can amend an amended assessment at any time within the limited amendment period applying to the original assessment. However, after that period expires, the Commissioner can only amend an amended assessment in the following cases (or if there is a special or unlimited time for amendment, for example because of fraud or evasion). [Schedule 1, item 1, subsections 170(1) and (2)]

2.43 The first case is where the Commissioner amends an earlier assessment about a particular in a way that reduces a taxpayer's liability and the Commissioner accepts a statement made by the taxpayer in making the amendment. This is commonly called a self amendment. Here, the Commissioner may amend the later assessment about that particular to increase the taxpayer's liability. [Schedule 1, item 1, item 1 in the table in subsection 170(3)]

2.44 The second case is where the Commissioner amends an earlier assessment about a particular in a way that increases a taxpayer's liability or reduces the liability (other than in a self amendment). The Commissioner may amend the later assessment about that particular in a way that reduces the taxpayer's liability. [Schedule 1, item 1, item 2 in the table in subsection 170(3)]

2.45 In these cases, there is a refreshed amendment period, of either 2 or 4 years (according to the amendment period applying to the taxpayer's original assessment), but only for the particular in question. [Schedule 1, item 1, subsection 170(3)]

Example 2.3 Emily is an individual taxpayer who is subject to the standard 2 -year amendment period. Eighteen months after her original assessment, Emily requests that the Commissioner amend her assessment to allow a deduction for work-related expenses. The Commissioner accepts Emily's statement, amends her assessment accordingly, and then Emily's standard amendment period expires. However, on further examination, the work-related expenses are not deductible. In addition, the Commissioner identifies that Emily has incorrectly deducted some interest expenses in the relevant year. The Commissioner has until 2 years after the day on which he gave notice of the amended assessment to amend the amended assessment to deny the deduction for work -related expenses. However, the Commissioner is out of time to amend to deny the deduction for the interest expenses.

2.46 If in the first case (see paragraph 2.43), the Commissioner amends an assessment about a particular to correct a self amendment, the Commissioner cannot, under the second case (see paragraph 2.44), amend again about that particular (but could, for example, amend to give effect to an objection to the most recent assessment). This structure is designed to stop the amendment period being extended multiple times by alternating first case and second case assessments. [Schedule 1, item 1, subsection 170(4)]

Example 2.4 Using Example 2.3, if the Commissioner amends to disallow the work -related expenses within 2 years of the amended assessment, as provided for in column 3 of item 1 in subsection 170(3), the Commissioner cannot amend under item 2 in the table in subsection 170(3) to reduce the liability. However, if Emily objects against the amended assessment within time, the Commissioner can amend at any time to give effect to the objection.

Commencement of the amendment period

2.47 The day of commencement of the amendment period will now be the day that the notice of assessment is given by the Commissioner, instead of the day that the tax is due and payable. This is to accommodate loss and nil liability assessments which have no tax due and payable, but are now eligible for limited amendment periods. This change will further shorten amendment periods, commonly by 21 days.

Extensions of the amendment period

2.48 The rewritten section 170 maintains the existing rules that allow for extension of amendment periods in three cases:

·
where the taxpayer applies for an amendment in the approved form before the end of the amendment period;
·
where the taxpayer applies for a private ruling before the end of the amendment period and the Commissioner makes a ruling in response to the application; and
·
where the Commissioner has started to examine a taxpayer's affairs but has not completed that examination by the end of the amendment period, the period can be extended in two cases: first, by Federal Court order where it is satisfied that the failure to complete the examination was due to the taxpayer's behaviour; secondly, by the consent of the taxpayer.

[Schedule 1, item 1, subsections 170(6) to (8)]

Definition of assessment

2.49 The definition of 'assessment' is amended to include nil liability assessments, with the result that nil assessments for the income years 2004-05 and later years will be eligible for the same amendment period as assessments of a positive liability with the same characteristics.

2.50 Currently, the primary meaning of assessment is the ascertainment of taxable income and the tax payable thereon. This is extended to cover the ascertainment that a taxpayer has no taxable income because his or her total deductions equal or exceed total assessable income. The new definition covers the case where the Commissioner ascertains that there is a taxable income but no tax is payable (eg, because the taxable income is below the tax-free threshold or because tax offsets reduce the tax payable to nil). [Schedule 1, item 16, subsection 6(1)]

2.51 The meaning of assessment does not extend to the ascertainment of the amount of a tax loss. The deductibility of a tax loss will be determined in the year that the taxpayer has income against which to offset the loss, in accordance with normal deduction principles.

Example 2.5 A company returns losses of $10 million in the first year, $12 million in the second year, $5 million in year 3 and $3 million in year 4. In year 5, the taxpayer returns a taxable income of $10 million after deducting $30 million for losses of previous years. During year 6, the taxpayer is audited with the result that the company's first year return was incorrect and should have returned a taxable income of $8 million. Under the new law, the ATO would be unable to issue an assessment of a positive liability for year one. However, the year 5 assessment can be amended to disallow the $10 million deduction claimed for the loss brought forward from year one.

2.52 The amendments to insert paragraphs (f) and (g) into the definition of 'assessment' in subsection 6(1) are required because the existing amendment provisions apply, through deeming provisions, to the assessment of additional tax under section 128TE (penalty for setting out incorrect amounts in dividend statements) and the assessment of tax payable under section 159GZZZZH (tax payable where infrastructure borrowing certificate cancelled). The new amendment provisions do not use the words needed to pick up the deeming rules. Consequently, to ensure that the amendment rules continue to apply in these cases, this Bill adds the ascertainment of this penalty or tax to the definition of assessment.

2.53 Under the current law, a taxpayer may not object against the Commissioner ascertaining that the taxpayer has no liability. Under the new law, a taxpayer's objection rights will be broader in one respect - a taxpayer will be able to object against a nil liability assessment in the unusual case where the taxpayer is seeking to move to a positive liability. Otherwise, there will continue to be no objection rights in nil liability cases. Where a taxpayer wants to dispute the quantum of a tax loss, that can be done in the income year the loss is deducted. [Schedule 1, items 17 and 18, section 175A]

Remaining subsections in section 170

2.54 Subsection 170(9A) has been repealed, as the circumstance it referred to (amendment of an assessment of a deceased estate) is covered by the new general rules allowing amendments, so that a special rule is unnecessary. Subsections (9E) and (9F) have been repealed as they relate to the SPOR provisions and are no longer needed. [Schedule 1, item 21, subsections 170(9A ), ( 9E) and (9F)]

2.55 Subsection 170(10) (which sets out specific unlimited amendment periods in the ITAA 1936) has been converted to the same tabular style as subsection 170(10AA) (specific unlimited amendment periods in the ITAA 1997). [Schedule 1, items 3 to 7, subsection 170(10)]

2.56 In reformatting subsection 170(10), the following provisions have been omitted because they have no ongoing operation for the 2004 -05 income year and later income years.

Provision reference Subject
26AAB Assessable income from the sale of a leased motor vehicle.
31C Purchase of trading stock not at arm's length.
36AAA Alternative election in case of disposal, death or compulsory destruction of live stock.
36AA Compensation for death, disposal or compulsory destruction of live stock.
36A(8) Disposal on change of ownership or interests in trading stock.
70A Cost of mains electricity connections.
74B(4) Certain election expenses not deductible.
75D(4) Deduction of expenditure on prevention of land degradation.
Subdivision B of Division 3 of Part III Development allowance.
Subdivision BA of Division 3 of Part III General investment allowance.
Subdivision F of Division 3 of Part III Substantiation of certain expenses for years of income up to and including 1993-94.
122B(2) Purchase of mining or prospecting right or information.
122BA(7) Allowable capital expenditure in respect of cash -bidding payments to acquire exploration or prospecting authorities.
122JD(2) Purchase of quarrying or prospecting right or information.
122T Recoupment of expenditure on mining or quarrying.
123A(2) or (3) Application of the Subdivision covering transport of certain minerals.
123BD(4) or (5) Application of the Subdivision covering transport of quarry materials.
124AB(3) Purchase of prospecting or mining rights or information.
124ABA(4) Allowable capital expenditure in respect of cash bidding payments for exploration permits and production licences.
124AQ Recoupment of expenditure on prospecting or mining for petroleum.
Division 16C of Part III Income equalisation deposits.
221YRA(2) Interest or royalty not an allowable deduction until payment made to Commissioner on account of tax.
Part XII Drought investment allowance.
Schedule 2A Calculating car expense deductions.
Schedule 2B Substantiation rules.

2.57 Subsection 170(10AB), which gives an unlimited amendment period for amounts you must repay, has been repealed and reintroduced as item 22 in subsection 170(10AA). In subsection 170(10AA), item 10 (car expenses) and item 210 (substantiation) have been repealed, consistent with Recommendation 3.8 of the Report.

2.58 Subsection 170(13) (dealing with certain company assessments) has been repealed, as the anti-avoidance issues it relates to are now subject to the 4-year amendment period. [Schedule 1, item 8, subsection 170(13)]

2.59 Definitions of 'limited amendment period', 'scheme', 'scheme benefit' and 'STS taxpayer' have been introduced into subsection 170(14), and the definition of 'tax' has been repealed as it is no longer necessary. [Schedule 1, items 9 to 13, subsection 170(14)]

2.60 Section 170A is also repealed as it is no longer necessary. That section states that 'Where a provision of this Act authorises the Commissioner to amend an assessment, that provision does not limit the power of the Commissioner to amend an assessment in accordance with any other provision of this Act'. The various sections outside section 170 that provide for special amendment periods generally make this clear by using words such as '...notwithstanding anything in section 170...' or '...despite anything in this Act...'. [Schedule 1, item 14, section 170A]

Application and transitional provisions

2.61 These amendments apply to assessments for the 2004-05 income year and later income years. [Schedule 1, items 15 and 19]

2.62 Transitional provisions apply for nil liability returns for the 2003-04 income year and earlier income years (see paragraphs 2.62 to 2.70).

Nil liability returns for the 2003-04 income year and earlier income years

2.63 To ensure that nil liability returns from previous years do not remain open to review indefinitely, Recommendation 3.5 of the Report proposed that nil liability (non-loss) returns become final after 4 years and loss returns become final after 6 years. This Bill gives effect to that recommendation through a new section 171A. Essentially, prior years are given a limited review period tailored according to the circumstances and information provided to the Commissioner.

2.64 If a taxpayer's return for the 2003-04 income year or an earlier year shows a nil liability, but not a loss, the Commissioner will generally have until the later of 31 October 2008, or 4 years from the date of lodgment of the return, to issue an assessment. [Schedule 1, item 20, item 1 in the table in subsection 171A(1)]

Example 2.6 James lodges his return for the income year ended 30 June 2002 in September 2002, showing taxable income below the threshold at which tax became payable for that year. The Commissioner has until 31 October 2008 to issue an assessment showing a positive liability for James' 2002 income year.

Example 2.7 Isabelle delays the lodgment of her return for the income year ended 30 June 2002 until 1 July 2005. When lodged, it shows taxable income below the threshold at which tax became payable. The Commissioner has until 1 July 2009 to issue an assessment showing a positive liability for Isabelle's 2002 income year.

2.65 If the taxpayer also deducted a tax loss in the nil liability year, the Commissioner will have 6 years from the later of the date of lodgment of the 2004-05 return or the date of lodgment of the nil return. [Schedule 1, item 20, item 2 in the table in subsection 171A(1)]

2.66 If a taxpayer's return for the 2003-04 income year or an earlier year shows a nil liability due to a loss in that year, no portion of which has been carried forward to the 2004-05 return, the Commissioner will have 6 years from the later of the date of lodgment of the 2004-05 return, or the lodgment of that prior year return, to issue an assessment. [Schedule 1, item 20, item 3 in the table in subsection 171A(1)]

2.67 If a taxpayer's return for the 2003-04 income year or an earlier year shows a nil liability due to a loss in that year, some of which has been carried forward to the 2004-05 return, and the taxpayer notified the Commissioner of this, the Commissioner will have 6 years from the later of the date the information is provided and the date of lodgment of the nil return to issue an assessment. [Schedule 1, item 20, item 4 in the table in subsection 171A(1)]

2.68 When a taxpayer becomes a member of a consolidated group and transfers their loss to a head company, that taxpayer loses their income tax identity. Section 171A ensures that the benefit of the limited assessment period is extended to the original taxpayer as well as to the consolidated group.

·
Where the taxpayer is not required to lodge a return for the 2004-05 year of income, the head company of the consolidated group can fulfil the requirement by lodging its return for that year [Schedule 1, item 20, items 2 and item 3, paragraph (a) in the table in subsection 171A(1)] .
·
If for example, the original taxpayer made a tax loss that was transferred to one consolidated group, but then moved to a second consolidated group and left its undeducted tax loss with the first group, the declaration of the tax loss by the first group would suffice to trigger the limited 6-year amendment period for the original taxpayer [Schedule 1, item 20 and item 4 in the table in subsection 171A(1)] .

Example 2.8 JKL Pty Ltd's return for the 2001-02 income year disclosed a nil taxable income and JKL deducted a tax loss in that year. In 2003 -04, JKL became part of the Ozceuticals consolidated group. For 2004-05, JKL does not lodge a return but the head company of the Ozceuticals consolidated group lodges a return on 1 December 2005.The Commissioner cannot make an assessment for JKL for the 2001 -02 income year after 1 December 2011.

2.69 Item 4 allows taxpayers who are not required to lodge 2004 -05 returns to notify the Commissioner of prior years losses without needing to lodge a return for the 2004-05 year.

Example 2.9 Andrew fails to lodge his return on time for the income year ended 30 June 2004. With his return for 2004-05, lodged on 1 February 2006, Andrew advises the Commissioner, in the approved form, that he has a carry forward loss from 2003-04. When offset against other income in 2004-05, the result is a taxable income below the threshold at which tax becomes payable in that year. Andrew later lodges his return for the 2003-04 income year on 1 September 2006. The Commissioner has until 1 September 2012 to issue an assessment showing a positive liability for Andrew's 2003-04 income year.

2.70 As with the rules for positive liability assessments, where a taxpayer that returned a nil liability has committed fraud or evasion, the Commissioner will have an unlimited time to make an assessment (just as for amending an assessment). Other special review periods will also continue to apply. [Schedule 1, item 20, subsection 171A(2)]

Consequential amendments

SPOR provisions no longer necessary

2.71 Because eligibility for the 2-year period of review is much broader than the requirements that previously applied to the shorter period of review (SPOR) class of taxpayers, the SPOR classification and the provisions relying on it are no longer necessary. One consequence of this change has been to remove a special record-retention period of 2 years (instead of the normal 5 years) that applied to SPOR taxpayers for payment summaries, Medicare levy family agreements and taxpayer declarations for returns lodged by tax agents. [Schedule 1, items 21, 22, 26 and 27]

2.72 To minimise unnecessary record keeping, under the new law taxpayers will only need to keep records for the 5 years or such a shorter period as determined by the Commissioner. The Commissioner will be able to make a determination by legislative instrument for a class of taxpayers or in writing for an individual taxpayer. [Schedule 1, items 23, 24, 33, 34 and 36, subsections 251R(6F) and (6FA) of the ITAA 1936, subsections 18-100(1) and 388-65(3), Schedule 1 of the TAA 1953]

2.73 The group of taxpayers for whom the Commissioner can exercise this power will be much larger than the current class of shorter period of review (SPOR) taxpayers. Moreover, where appropriate, the Commissioner can shorten the retention period to less than the current 2 -year period.

Objection periods to reflect amendment periods

2.74 The objection provisions are altered to correspond with the new amendment periods. If the taxpayer is eligible for the standard amendment period, they must lodge any objection with the Commissioner within 2 years after the notice of assessment is given to the taxpayer. If a 4-year amendment period applies, the objection must be lodged within 4 years after the notice of assessment is given to the taxpayer. There has been no change to the rules relating to objections made under section 78A of the Fringe Benefits Tax Assessment Act 1986 or section 160AL of the ITAA 1936. [Schedule 1, item 28, paragraphs 14ZW(1)(aa) and (aaa) of the TAA 1953]

2.75 For objections against a private ruling, the time allowed has been reduced to 2 years after the last day allowed for lodging a return for that income year (or 60 days after the notice of the decision was given to the person, whichever is later), for those taxpayers who qualify for the standard amendment period. The time limit for a person with a 4-year amendment period has not changed. [Schedule 1, item 29, subsections 14ZW(1A) and (1AA) of the TAA 1953]

2.76 Changes have also been made to references in the objection provisions. [Schedule 1, items 30 and 31, paragraphs 14ZW(1B)(b) and 14ZW(1BA)(b) of the TAA 1953]

Nil assessments

2.77 There is a series of consequential amendments, particularly to the assessment rules for income tax, to reflect that the Commissioner may now make an assessment that a taxpayer has no taxable income or that no tax is payable on the taxable income. [Schedule 1, items 38 to 45, sections 161AA, 166, 166A, 168 and 169 of the ITAA 1936]

2.78 The crediting rules in the pay as you go provisions are similarly amended to reflect the expanded definition of assessment, although no change in outcome will follow. Taxpayers will be entitled to credits in the same way at the same time. [Schedule 1, items 46 to 58, sections 18-15, 18-20, 18-25, 18-27, 45-30 and 45-865, Schedule 1 to the TAA 1953 and section 8K of the Taxation (Interest on Overpayments and Early Payments) Act 1983]

Date of effect

2.79 These consequential amendments generally apply for the 2004 -05 income year and later income years. [Schedule 1, items 25, 32 and 59]

2.80 The new record retention rules for payment summaries apply from the financial year beginning 1 July 2004 and the record retention rules for declarations apply to declarations made on or after 1 April 2004. [Schedule 1, items 35 and 37]

Chapter 3 - ATO advice

Outline of chapter

3.1 Schedule 2 to this Bill amends the Income Tax Assessment Act 1936 (ITAA 1936) and the Taxation Administration Act 1953 (TAA 1953) to implement a new framework for Australian Taxation Office (ATO) advice. This chapter deals with that framework.

Context of amendments

3.2 This Bill implements the Government's response to the recommendations made in the Report on Aspects of Income Tax Self Assessment (the Report). Background to the Report and its recommendations is in Chapter 1 of this Bill.

3.3 The ATO gives a wide range of advice to taxpayers and their representatives about how, in the Commissioner of Taxation's (Commissioner's) opinion, the tax law applies, or would apply. That advice ranges from general information for the public to advice relating to specific taxpayers and arrangements.

3.4 Since 1992, the tax law has made certain categories of ATO advice, called rulings, binding on the ATO. Where the ATO has issued a ruling that applies to a taxpayer, the taxpayer is not liable to pay more tax than the ruling requires, even if the ruling turns out to be wrong. In such a case, the taxpayer cannot be liable for penalties or interest either. Some non -ruling advice from the ATO also currently gives taxpayers protection from penalties.

3.5 The Report recommended that the current system be expanded in scope and effectiveness to provide protection in a wider range of circumstances (Recommendation 2.1).

Public rulings

3.6 Under the current law, the Commissioner may make public rulings on the way in which, in the Commissioner's opinion, a particular tax law would apply to a person or class of persons in relation to an arrangement or a class of arrangements.

3.7 Public rulings are labelled as such, published and Gazetted and may be withdrawn. Under the current law, rulings can only be binding in relation to matters affecting a taxpayer's liability.

3.8 The Report recommended expanding the category of matters that a public ruling may deal with to cover matters of administration, procedure, collection and ultimate conclusions of fact (Recommendation 2.2). The Report also concluded that, even if some other general information products might not be suitable for inclusion in the formal ruling series, some of them such as TaxPack should be able to have the same protection for certain categories of taxpayers. Thus the Report recommended that the Commissioner be empowered to declare that advice provided for the general information of non-business self -preparers be binding (Recommendation 2.3).

Private rulings

3.9 Under the current law, private rulings are available to taxpayers in certain circumstances. The basic framework for private rulings is as follows:

·
A person may apply for a private ruling about the way in which, in the Commissioner's opinion, a tax law would apply to them.
·
The Commissioner is required to comply with a private ruling application unless the request falls into one of a number of stipulated categories.
·
Once a person receives a private ruling, the Commissioner is bound by the interpretation in the ruling if the tax payable under the law would exceed that payable under the ruling.

3.10 Among a range of improvements, the Report recommended:

·
expanding the category of matters on which private rulings can be provided (Recommendation 2.11);
·
providing an avenue for review where an application for a private ruling has not been determined within 60 days (Recommendation 2.15);
·
allowing the Commissioner to make reasonable assumptions in dealing with a private ruling request (Recommendation 2.16);
·
allowing the Commissioner to consider information other than that supplied by the applicant in making a private ruling, provided the applicant is informed (Recommendation 2.17);
·
clarifying the rules where rulings are inconsistent (Recommendation 2.19);
·
allowing the Commissioner to take account of additional information supplied after making the private ruling application (Recommendation 2.21); and
·
allowing future trustees of a trust estate to rely on private rulings obtained by their predecessors (Recommendation 2.22).

Oral rulings

3.11 The current provisions governing oral rulings were enacted in 1999 (by A New Tax System (Tax Administration) Act 1999) in response to a recommendation made in Tax Reform: not a new tax, a new tax system (ANTS). These provisions were intended to allow taxpayers with very simple affairs to rely on oral advice received from the ATO in much the same way as written private rulings.

3.12 Before the oral rulings provisions were enacted the Commissioner was not legally bound by oral advice, although there were administrative practices to achieve this result in some cases.

3.13 Currently oral rulings are:

·
available to individuals who apply to the Commissioner for a ruling on the way in which the income tax law applies to them (although a person can apply on another's behalf in very limited circumstances);
·
only available on interpretative matters that are straightforward or simple; and
·
legally binding on the Commissioner if they result in a lower amount of final tax payable by the taxpayer.

3.14 The Report recommended extending the availability of oral rulings to all non -business issues raised by self -preparing individual taxpayers unless the issues are so complex that they would better be dealt with in writing (Recommendation 2.23).

Other advice and general administrative practice

3.15 Under the current law, taxpayers are protected from administrative penalties to the extent that they follow non -ruling advice given to them or their agents by the ATO or a statement in an ATO publication, or if they act consistently with the ATO's general administrative practice. There is no similar protection from interest charges, although the Commissioner has the power to remit them in certain circumstances.

3.16 The Report recommended extending that protection to cover interest charges (Recommendation 2.1) and that taxpayers who rely on public rulings in draft form should also be protected from penalties and interest in the event that the final ruling is issued in different terms, to their detriment (Recommendation 2.7).

Summary of new law

3.17 This Bill replaces the existing provisions on rulings entirely. It makes certain categories of ATO advice - called rulings - legally binding on the Commissioner where taxpayers rely on rulings that apply to them. The categories of rulings are:

·
public rulings;
·
private rulings; and
·
oral rulings.

3.18 In some cases this Bill also gives taxpayers protection from interest charges in the absence of a ruling. This protection applies where they reasonably and in good faith rely on:

·
advice (other than a ruling), or a written statement in a publication by the Commissioner, unless the advice is labelled as non -binding; or
·
the Commissioner's general administrative practice.

This Bill does not address the question of protection from penalties in these circumstances because section 284 -215 of Schedule 1 to the TAA 1953 remains in force, covering that ground. Between this Bill and section 284-215, Recommendation 2.1 is given effect in full.

Comparison of key features of new law and current law

New law Current law
The expanded rulings regime applies to provisions of Acts and regulations applying to income tax, withholding tax, mining withholding tax, Medicare levy, fringe benefits tax, franking deficit tax, venture capital deficit tax, over -franking tax and product grants and benefits, including provisions about the administration and collection of those taxes relevant to the rulings regime. The rulings regime applies to income tax, withholding tax, mining withholding tax, Medicare levy, fringe benefits tax, franking deficit tax, venture capital deficit tax, over -franking tax and product grant and benefit laws.
A ruling binds the Commissioner if the ruling applies to a taxpayer and the taxpayer relies on the ruling. A taxpayer relies on a ruling when they act (or omit to act) in accordance with the ruling.

A taxpayer can stop relying on a ruling by acting (or omitting to act) in a way that is not in accordance with the ruling, within their period of review.

If there is a ruling on the way in which a tax law applies to a person in relation to an arrangement, and that law applies to a person in relation to that arrangement in a different way, and the amount of tax would be lower (or the amount of the grant or benefit would be higher) under the ruling, then the tax liability (or grant or benefit) is determined according to the ruling.
Relying on a ruling provides protection from additional primary tax, penalties and interest. Relying on other advice or general administrative practice provides protection from penalties and interest. Relying on a ruling provides protection from additional primary tax, penalties and interest. Relying on other advice or general administrative practice provides protection from penalties.
Public rulings may apply to all entities or a class of entities, either generally or in relation to a particular scheme or class of schemes. Public rulings may apply to any person or class of persons in relation to an arrangement or class of arrangements.
Public rulings may be made on any matter involved in the application of a provision, including matters relating to administration, procedure, collection and ultimate conclusions of fact. Public rulings may be made on issues relating to the calculation of a tax liability, but not on matters relating to administration, procedure, collection or on questions of fact.
Public rulings may be withdrawn by publishing notice of the withdrawal. The withdrawal may take effect from the day the notice is published or such later date as specified in the ruling. A public ruling that is withdrawn continues to apply to schemes begun to be carried out before the withdrawal. A public ruling may be withdrawn at any time. A public ruling that is withdrawn continues to apply to arrangements begun to be carried out before the withdrawal.
Private rulings are statements about the way in which the Commissioner considers a relevant provision applies or would apply to a specified scheme. They may cover anything involved in the application of the provision, including valuations of any thing. The Commissioner may charge for a private ruling on a valuation issue. Private rulings may deal with how the Commissioner considers a tax law or tax laws would apply to a person in respect of a year of income in relation to an arrangement, or how a product grant or benefit law would apply to a person in respect of a claim period in relation to an arrangement.
The Commissioner may decline to make a private ruling if he or she considers that making the ruling would prejudice or unduly restrict the administration of a taxation law; the matter to be ruled on is already being, or has been considered; or where the matter to be ruled on is how the Commissioner would exercise a power under a relevant provision, and the Commissioner decides whether to exercise the power. The Commissioner is not required to comply with an application for a private ruling if any of the listed circumstances are present. For example, the Commissioner is not required to comply with an application for a private ruling if there is already a private ruling on the matter sought to be ruled on, or if the application is frivolous or vexatious.
The Commissioner is taken not to have made a private or oral ruling by later issuing an inconsistent public ruling, provided that neither the scheme nor the income year (or other period) to which the private or oral ruling relates has begun. The Commissioner may withdraw a private ruling by serving notice on the applicant or issuing an inconsistent public ruling. If the relevant arrangement has begun, (or the relevant income year has commenced), the Commissioner may only withdraw the ruling in limited circumstances.
If a taxpayer has applied for a private ruling and the Commissioner has neither made the ruling nor declined to make the ruling within 60 days, the applicant may issue a written notice requiring the Commissioner to make the ruling. If the Commissioner fails to make the ruling or declines to rule within 30 days, this leads to an objection right. If a taxpayer has applied for a private ruling and the Commissioner has neither made the ruling nor told the applicant that the application will not be complied with nor asked for further information from the taxpayer, the taxpayer may ask the Commissioner for a written statement of the reasons why the consideration of the application has been delayed.
The Commissioner must ask for further information from the taxpayer if the private or oral ruling cannot be made without that further information.

The Commissioner may take into account additional information supplied by the applicant after the application was made but before the private or oral ruling is given.

The Commissioner may rely on information from other sources, provided that the Commissioner tells the applicant what the information is, and gives them a reasonable opportunity to respond before making the private or oral ruling.

The Commissioner must ask for further information from the taxpayer if the private or oral ruling cannot be made without that further information.

The Commissioner is not empowered to rely on information provided by an entity other than the applicant.

For a private or oral ruling, the Commissioner can make assumptions about a future event or other matter, provided the Commissioner informs the applicant of the assumptions and gives the applicant a reasonable opportunity to respond. If the Commissioner considers that the correctness of a private ruling would depend on assumptions made about a future event or other matter, the Commissioner may decline to make the ruling, or may make assumptions as the Commissioner considers to be appropriate.
No change. A taxpayer may object to a private ruling and appeal from an objection decision.
An individual, non-business taxpayer may apply for an oral ruling on how the tax law applies to them. A limited class of taxpayer may apply for an oral ruling on how the income tax law applies to them.
The Commissioner has the power to decline to make an oral ruling where the question being asked relates to a business matter or a complex matter. The Commissioner can only give an oral ruling where the taxpayer's tax affairs fall within specified categories and the taxpayer's inquiry is simple.
The validity of any ruling is not affected because there is a procedural defect in the making of that ruling. The validity of an oral ruling or private ruling is not affected because there is a procedural defect in the making of that ruling.
A document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner, which purports to be a copy of a public or private ruling, or of a notice of withdrawal of a public ruling is conclusive evidence of the proper making of either type of ruling, or of the withdrawal of the public ruling. The production of a notice of, or the notice of the withdrawal of, a private ruling or a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner, purporting to be a copy of such a notice, is conclusive evidence of the proper making of the private ruling or its withdrawal.

Detailed explanation of new law

Object

3.19 The object of the new law is to provide improved ways for taxpayers to find out the Commissioner's view about how certain laws apply to them, so that the risks of uncertainty when self assessing, or working out their tax obligations or entitlements, are reduced.

3.20 This object is achieved by:

·
making advice in the form of rulings by the Commissioner available to many taxpayers on a wide range of matters;
·
ensuring that the Commissioner provides rulings in a timely manner;
·
enabling the Commissioner to obtain, and make rulings based on, relevant information;
·
protecting taxpayers from increases in tax and from penalties and interest where they rely on rulings;
·
limiting the ways the Commissioner can alter rulings to a taxpayer's detriment; and
·
giving protection from interest charges where a taxpayer relies on other advice from the Commissioner, or on the Commissioner's general administrative practice.

Common rules for all rulings

Provisions that are relevant for rulings

3.21 This Bill governs rulings about income tax, withholding tax, mining withholding tax, the Medicare levy, fringe benefits tax, franking deficit tax, venture capital deficit tax and over -franking tax, plus rulings about a grant or benefit mentioned in section 8 of the Product Grants and Benefits Administration Act 2000. The listing technique allows the scope of the rulings regime to be expanded if future events prove that it is suitable to apply to other taxes administered by the Commissioner (Recommendation 7.2).

3.22 Section 357 -55, read in conjunction with subsections 358 -5(2) and 359 -5(2), allows the Commissioner to make rulings about any aspect of the taxes and entitlements listed. The Commissioner may make rulings on all the matters and circumstances in which rulings are currently made and the authority is extended to cover any aspect of the tax or entitlement, including the collection and recovery of the tax, and its administration, or the administration or payment of a relevant grant or benefit. Note, however, that the Commissioner may decline to make a private ruling (see paragraph 3.77) or an oral ruling (see paragraph 3.122). [Schedule 2, item 1, section 357-55 of Schedule 1 to the TAA 1953]

When a ruling binds the Commissioner

3.23 A ruling binds the Commissioner if the ruling applies to the taxpayer and the taxpayer relies on the ruling. [Schedule 2, item 1, subsection 357-60(1) of Schedule 1 to the TAA 1953]

3.24 A ruling applies to a taxpayer if the taxpayer is a member of the class to whom the ruling applies (in the case of a public ruling), or it is given in response to an application (in the case of a private or oral ruling) and the facts, assumptions or conditions set out in the ruling are met. The ruling applies for the period specified, while the law to which it relates remains in force. Where the law is merely re -made, the ruling continues to apply (see paragraph 3.34), but where the law is repealed or materially amended, the ruling ceases to apply.

3.25 A taxpayer relies on a ruling when the taxpayer acts (or omits to act) in accordance with it. The taxpayer does not need to know of the existence of a public ruling in order to rely on it.

3.26 If a taxpayer acts (or has acted, or omits to act) in the way stated, a ruling that applies to a taxpayer binds the Commissioner and the Commissioner must not apply the provision in a way that is inconsistent with the ruling. However, if the scheme is not implemented in the way set out in the ruling, or material facts were omitted from the ruling application, or misleadingly or inaccurately stated, the ruling does not bind the Commissioner. [Schedule 2, item 1, paragraph 357-60(1)(b) of Schedule 1 to the TAA 1953]

Example 3.1 Raelene applies for and obtains a private ruling that states that a payment from a company is not assessable income. Raelene lodges her tax return, omitting to include the amount in assessable income. The ruling is binding on the Commissioner because it applies to Raelene and she has relied on it.

3.27 A taxpayer may rely on a ruling at any time unless prevented from doing so by a time limit imposed by a taxation law, for example, the taxpayer's period of review for their assessment. It is not necessary for the taxpayer to rely on a ruling at the first opportunity, but the opportunity must in practice be taken before the end of the time in which they can request an amendment of their assessment. [Schedule 2, item 1, subsection 357-60(2) of Schedule 1 to the TAA 1953]

Stopping relying on a ruling

3.28 A taxpayer may change their mind and stop relying on a ruling and, having stopped relying on a ruling, may rely on it again at a later time. A taxpayer stops relying on a ruling by acting, or omitting to act, in a way that is not in accordance with the ruling. However, the ability for such changes of mind to affect a taxpayer's liability is limited by relevant time limits contained in taxation laws. [Schedule 2, item 1, section 357-65 of Schedule 1 to the TAA 1953]

Law more favourable than ruling

3.29 Where a taxpayer relies on a ruling that applies to them, the Commissioner may nevertheless apply a relevant provision of the law as if the taxpayer had not relied on the ruling, if doing so would produce a more favourable result for the taxpayer. The Commissioner can do this unless prevented by a relevant time limit in the tax law. However, the Commissioner does not have a duty to consider the ruling at the time of processing the taxpayer's self assessment. [Schedule 2, item 1, section 357-70 of Schedule 1 to the TAA 1953]

3.30 The interaction of the provision that rulings bind the Commissioner with the proviso that the Commissioner may apply a more favourable interpretation of the law means that rulings bind the Commissioner in the following ways:

·
To the extent that a ruling determines a tax liability or an amount (or whether there is a tax liability or an amount) under a relevant provision, the amount must be determined in accordance with the ruling. However, if the Commissioner concludes that the ruling was wrong, the Commissioner may adopt the correct position if it is more favourable to the taxpayer than was set out in the ruling.
·
To the extent that a ruling expresses the Commissioner's opinion on an ultimate conclusion of fact for the purposes of a relevant provision (eg, whether the taxpayer is a resident or is carrying on a business), the Commissioner is bound to follow his or her expressed opinion, or adopt the correct conclusion if that is more favourable for the taxpayer to whom the ruling applies.
·
To the extent that a ruling deals with matters of administration, procedure, collection or any other matter involved in the application of a relevant provision, the Commissioner must not act inconsistently with the ruling to the taxpayer's detriment.

[Schedule 2, item 1, sections 357-60 and 357-70 of Schedule 1 to the TAA 1953]

Inconsistent rulings

3.31 The rules governing cases where two inconsistent rulings apply to the same taxpayer are listed in the table at subsection 357 -75(1). The structure of the table is such that a taxpayer may always choose to rely on a public ruling that applies to them and they may choose to rely on a private ruling that specifically addresses their circumstances, notwithstanding an apparent inconsistency with a prior public ruling. It allows the Commissioner to correct erroneous private and oral rulings by a public ruling, but only where the taxpayer has not already entered into the relevant scheme and the relevant income year or other period has not commenced. Finally, it allows a taxpayer to check or clarify a private or oral ruling (although the Commissioner may decline to rule if there is already a ruling on the matter, see paragraph 3.78), but only if they do so honestly, by disclosing the existence of the prior ruling when they apply for the later ruling. A special rule for revising private rulings allows the Commissioner to correct a private ruling with another private ruling in limited circumstances (see paragraphs 3.97 to 3.99). [Schedule 2, item 1, subsection 357-75(1) of Schedule 1 to the TAA 1953]

3.32 The table in subsection 357 -75(1) also governs cases where there are three or more inconsistent rulings. In such cases, the rules in the table should be applied to each combination of two rulings in the order in which they were made, to determine whether any of the rulings are taken not to have been made, and then to determine which of the remaining rulings the taxpayer can rely on. [Schedule 2, item 1, subsection 357-75(2) of Schedule 1 to the TAA 1953]

Other common rules

3.33 For the purposes of these provisions, if a contract requiring a scheme has been entered into, the scheme is taken to have begun to be carried out. For instance, a company might enter into a contract requiring the construction of a pipeline, which will not commence for another 6 months. The scheme of constructing the pipeline will have begun to be carried out when the contract was made. [Schedule 2, item 1, section 357-80 of Schedule 1 to the TAA 1953]

3.34 If the Commissioner has made a ruling about a relevant provision and that provision is re -enacted or remade, the ruling is taken to be about the re -enacted or remade provision, so far as the new law expresses the same ideas as the old law. If the law is changed, the ruling ceases to apply. [Schedule 2, item 1, section 357-85 of Schedule 1 to the TAA 1953]

3.35 The validity of the ruling is not affected by the fact that a provision relating to the form of the ruling or the procedure for making it has not been complied with. For example, if the Commissioner issues a public ruling, but fails to publish notice of the making of that ruling in the Gazette as required by subsection 358 -5(4) of this Bill, a taxpayer to whom it applies may nevertheless rely on the ruling and it will bind the Commissioner. [Schedule 2, item 1, section 357-90 of Schedule 1 to the TAA 1953]

Common rules for public and private rulings

3.36 To improve flexibility and timeliness in communications between the Commissioner and other entities for the purposes of a public ruling or a private ruling, communications may be made electronically. The Commissioner may therefore provide an electronic copy of a private ruling to an applicant, where the applicant is willing and able to receive it in that form. [Schedule 2, item 1, section 357-95 of Schedule 1 to the TAA 1953]

3.37 A document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner that purports to be a copy of a public or private ruling, or of a notice of withdrawal of a public ruling is conclusive evidence of the proper making of either type of ruling, or of the withdrawal of the public ruling. This provision does not apply to the withdrawal of private rulings, as private rulings cannot be withdrawn, although they can be revised in limited circumstances (see paragraph 3.97). [Schedule 2, item 1, section 357-100 of Schedule 1 to the TAA 1953]

Common rules for private and oral rulings

3.38 To make a private or oral ruling, the Commissioner may require further information. The Commissioner must first ask for that information from the taxpayer. The Commissioner may also obtain information necessary for a ruling in other ways, but is not obliged to do so. While the Commissioner cannot refuse to rule simply because insufficient information was provided with the initial application, where the Commissioner asks the applicant for additional information, but it is not provided within a reasonable time, the Commissioner may decline to rule.

3.39 The Commissioner should make a private ruling within 60 days. Failure to do so allows the taxpayer to take action to have their application determined, which may lead to an objection right (see paragraph 3.109). However, where the Commissioner requests additional information from a taxpayer, the 60 -day period is suspended until the information requested is received by the Commissioner (see paragraph 3.96). If a response is not received within a reasonable time the Commissioner may decline to rule. [Schedule 2, item 1, section 357-105 of Schedule 1 to the TAA 1953]

3.40 Issuing a ruling may depend on an assumption about an unknown fact, such as a future event. If the Commissioner considers that correctly making a private or oral ruling would depend on an assumption, the Commissioner may make the assumption and tell the applicant about it, giving a reasonable time for their response, or may decline to make the ruling.

3.41 Where the Commissioner informs the applicant of any proposed assumption, the 60-day period after which a taxpayer can require the Commissioner to make the private ruling is suspended until the Commissioner receives the applicant's response about the assumptions. [Schedule 2, item 1, section 357-110 of Schedule 1 to the TAA 1953]

3.42 The Commissioner may take into account additional information provided by the applicant after the initial application, whether provided in response to a request for further information or otherwise. [Schedule 2, item 1, section 357-115 of Schedule 1 to the TAA 1953]

3.43 In considering an application for a private ruling or an oral ruling, the Commissioner may rely on relevant information provided by an entity other than the applicant, whenever the relevant information is provided, as long as the Commissioner tells the applicant that the Commissioner intends to take the information into account and gives the applicant a reasonable opportunity to respond.

3.44 If disclosure of the relevant information is not possible because such action would breach the tax secrecy provisions, privacy legislation or the confidentiality of the person providing the information, the Commissioner must not use that information in making a ruling. If the Commissioner considers that information that cannot be disclosed is material to the outcome of the ruling, the Commissioner may decline to rule. It is expected that this circumstance would be very rare.

3.45 Where the Commissioner informs the applicant within 60 days of receiving the application that he or she intends to take into account the relevant information, the 60-day period after which a taxpayer can require the Commissioner to make the private ruling requested is suspended until the Commissioner receives the applicant's response about the information. [Schedule 2, item 1, section 357-120 of Schedule 1 to the TAA 1953]

3.46 Making an application for a private or an oral ruling does not affect the taxpayer's other obligations or the Commissioner's right to exercise powers. For example, a taxpayer who applies for a ruling is not excused from their obligation to lodge a tax return or pay their tax liabilities, and the Commissioner remains empowered to make or amend their assessment (in accordance with the laws governing periods of review) or undertake collection action. [Schedule 2, item 1, section 357-125 of Schedule 1 to the TAA 1953]

Public rulings

What is a public ruling?

3.47 A public ruling is binding written advice, published by the Commissioner for the information of taxpayers generally, on the way in which, in the Commissioner's opinion, a provision of a tax law would apply. Thus a public ruling may be relied on by anyone to whom it applies. A public ruling may be stated to apply to:

·
entities generally, or a class of entities;
·
entities generally, or a class of entities, in relation to a class of schemes; or
·
entities generally, or a class of entities, in relation to a particular scheme.

[Schedule 2, item 1, subsection 358-5(1) of Schedule 1 to the TAA 1953]

3.48 As noted in the Report, general advice provided by the ATO should wherever possible be made in a style that is simple and easy to understand. Public rulings with a potentially limited readership may be tailored to the needs of the target audience.

3.49 A public ruling may deal with anything involved in the application of a provision, including issues relating to liability, administration, procedure, collection, and ultimate conclusions of fact. [Schedule 2, item 1, subsection 358-5(2) of Schedule 1 to the TAA 1953]

3.50 The Commissioner must publish notice of the making of a public ruling in the Gazette. A public ruling may also be published by electronic or other means and must state that it is a public ruling. However, the validity of the ruling is not affected by a procedural defect (see paragraph 3.35). [Schedule 2, item 1, subsections 358-5(2) and (4) of Schedule 1 to the TAA 1953]

3.51 The structure of section 358-5 provides flexibility so that, in addition to broad statements that anyone may rely on, the Commissioner may tailor public rulings to a set of arrangements applying to a range of taxpayers (ie, class or product rulings) where a qualified, conditional or more limited statement is required. A single document labelled a public ruling may in practice contain a number of separate expressions of opinion about provisions, thus consisting of a number of separate rulings. This approach allows the Commissioner flexibility. (It is particularly relevant to electronic information where it is not always clear what is a separate document.) By using this flexibility, the Commissioner may give effect to Recommendation 2.3 and declare that advice such as TaxPack or E-tax is a public ruling for a class of taxpayers, such as individual, non -business self-preparers.

Example 3.2 The Commissioner issues an information booklet which is stated to be a public ruling and to apply to taxpayers who are 'non-business individual self-preparers who have acted in good faith and reasonably relied on the ruling'. This public ruling is for an identifiable class of entities even though the booklet itself contains information relevant to a broader class.Kerry and Simon are non-business self-preparers. Kerry, in preparing her own tax return acts in good faith and reasonably relies on the public ruling. However, Simon, unreasonably attempts to exploit a typographical error in the booklet despite being notified of the error by the ATO before he relies on it.Kerry can rely on the ruling but Simon cannot, as Simon does not fall within the identifiable class of entities to which the ruling applies.

When do public rulings apply?

3.52 A public ruling binds the Commissioner from the time it is published, or from such earlier or later time as is specified in the ruling. [Schedule 2, item 1, subsection 358-10(1) of Schedule 1 to the TAA 1953]

3.53 Taxpayer uncertainty may arise where public rulings are withdrawn and not replaced or where the Commissioner changes an established interpretation or practice. Therefore, a public ruling that changes the Commissioner's general administrative practice or overturns a previous ruling cannot apply earlier than the day on which it is published if that change is less favourable to the taxpayer than the practice. Where a final ruling takes a position contrary to that canvassed in a draft ruling that represents the Commissioner's general administrative practice (see paragraph 3.130), that final ruling cannot apply retrospectively, to a taxpayer's detriment. [Schedule 2, item 1, subsection 358-10(2) of Schedule 1 to the TAA 1953]

3.54 A public ruling may specify the time when it ceases to apply. This power would usually be used when changing from one public position to another, over time. Where a public ruling does not specify the time at which it ceases to apply, it will apply until it is withdrawn. [Schedule 2, item 1, section 358-15 of Schedule 1 to the TAA 1953]

3.55 The Commissioner withdraws a public ruling, either wholly or in part, by publishing notice in the Gazette. The withdrawal is effective from the time specified in the notice, and this time cannot be retrospective. Where a public ruling is withdrawn, that ruling continues to apply to schemes to which it applied that had begun to be carried out before the withdrawal took place, but does not apply to schemes that begin to be carried out after the withdrawal. [Schedule 2, item 1, section 358-20 of Schedule 1 to the TAA 1953]

3.56 For the withdrawal of a public ruling to be valid, all the requirements mentioned in section 358 -20 must be complied with. Where all the requirements are not met, the public ruling remains in force (which contrasts with the making of a ruling, where lack of formality does not affect the validity of the ruling). As a result, if the Commissioner purports to withdraw a public ruling, but fails to publish notice of the withdrawal in the Gazette, the public ruling continues to apply until it is effectively withdrawn.

3.57 The timing rules specifically recognise that, in many cases, it would be inappropriate for a public ruling to be withdrawn on short notice and accordingly grant the Commissioner flexibility to defer withdrawal. For example, a product ruling is a form of public ruling issued to provide investor certainty that the taxation benefits claimed in the promotion of an investment product are indeed available to investors. Many hundreds or thousands of investors may invest on the basis of the claims, as endorsed by the Commissioner.

3.58 If the Commissioner decided that an aspect of such a ruling was, on reflection, incorrect, and withdrawal occurred late in the financial year, in the peak investing period, the result might be that investors on different days would receive radically different tax outcomes. This might occur irrespective of how well the withdrawal was publicised. In some cases the viability of the investment or the timing of the project and its returns might be prejudiced by the sudden withdrawal of projected investment, with detrimental consequences for those who invested while the ruling was in force. In such a case it may be entirely appropriate for the withdrawal or modification to take effect from the beginning of the following financial year, even if that is some months away.

3.59 In other cases, it might emerge that aspects of a public ruling are outdated or incorrect due to changing circumstances, technological developments or judicial decisions. While it is less than ideal for a ruling to remain in force where the Commissioner has doubts about its correctness, nevertheless the consequences of precipitate withdrawal may be worse. For example, although a ruling may no longer be absolutely correct, it may take some time to produce a replacement and the existing position may be the best alternative to provide taxpayers with certainty in the interim. Recognising that public rulings are premium products, often relied upon by many taxpayers through their practitioners, and are not issued lightly, it is appropriate that they should generally only be withdrawn when either, they are able to be adequately replaced by another product that meets the need originally identified, or they are clearly no longer needed.

3.60 As a result, in appropriate circumstances, the Commissioner may leave a public ruling in force even though there are doubts about its correctness. In each case of the proposed withdrawal of a public ruling, the Commissioner is entitled to have regard to the consequences for taxpayers of an immediate date of effect of withdrawal and may therefore delay the date to minimise those consequences.

Private rulings

What is a private ruling?

3.61 A private ruling is a written expression of the Commissioner's opinion on the way in which the Commissioner considers a relevant provision applies, or would apply, to a taxpayer who has sought an opinion. [Schedule 2, item 1, section 359-5 of Schedule 1 to the TAA 1953]

What can you apply for a private ruling on?

3.62 A private ruling may deal with anything involved in the application of a relevant provision, including issues relating to liability, administration, procedure and collection, and ultimate conclusions of fact. This includes being able to provide a ruling which covers the value of any thing (see paragraph 3.86).

3.63 As with public and oral rulings, the Commissioner is bound by the ruling if the ruling applies to the taxpayer and the taxpayer relies on it (see paragraphs 3.23 to 3.27).

3.64 The essential difference between a private ruling and a public ruling is that a private ruling deals with a specific course of action by a particular person, whereas a public ruling is provided for the information of taxpayers generally, or a class of taxpayers.

3.65 A single document may contain opinions about a number of provisions and may therefore constitute a number of private rulings. A private ruling may deal with any matter involved in the application of a relevant provision, including matters relating to liability, administration, procedure and collection, and ultimate conclusions of fact. However, in expanding the range of situations in which the Commissioner may provide a private ruling, the intent is not to oblige the Commissioner to provide a ruling when the more appropriate course would be to take other authorised action such as issuing an assessment, exercising a discretion, conducting an audit, initiating recovery action or otherwise performing his or her statutory responsibilities. Thus, the Commissioner may decline to rule in certain circumstances (see paragraphs 3.77 to 3.85).

3.66 By considering and exercising an administrative power such as the power to extend time to pay a tax liability, the Commissioner is not making a ruling.

Applying for a private ruling

3.67 Any taxpayer, their agent (which includes the taxpayer's tax agent) or their legal personal representative may apply for a private ruling. Trustees may apply for private rulings about the affairs of the trust, and partners may apply for private rulings on behalf of partnerships. With some limited exceptions, the ruling applies only to the entity in respect of whom the application was made. However, a private ruling given to a trustee in respect of the tax affairs of a trust continues to apply where a new trustee is appointed and a ruling relating to the affairs of the trust also applies to the beneficiaries of the trust. In situations where the trustee is replaced, the private ruling continues to apply to the new trustee, or any trustee replacing the new trustee, provided the ruling would have applied to the former trustee. [Schedule 2, item 1, subsection 359-10(1) and section 359-30 of Schedule 1 to the TAA 1953]

3.68 An application for a private ruling must be made in a form approved by the Commissioner. The Commissioner can approve a form under section 388 -50 of Schedule 1 to the TAA 1953. In stating the form that a ruling application may take, the Commissioner may require certain information to be supplied. [Schedule 2, item 1, subsection 359-10(2) of Schedule 2 to the TAA 1953]

3.69 An applicant may withdraw their application for a private ruling (orally or in writing) at any time before the ruling is made. The Commissioner must give written confirmation of the withdrawal. [Schedule 2, item 1, subsection 359-10(3) of Schedule 1 to the TAA 1953]

Additional information

3.70 As outlined earlier under common rules for private and oral rulings (see paragraphs 3.38 to 3.46), there are four ways the Commissioner may get information about matters that are not in a private ruling application in order to make the private ruling:

·
The Commissioner must ask the applicant to provide additional information where the Commissioner considers it is required.
·
The applicant may volunteer additional information after the application is made.
·
The Commissioner may rely on information supplied by an entity other than the applicant, provided that the applicant is made aware of that information and has an opportunity to comment on it.
·
The Commissioner may make an assumption that the Commissioner considers to be most appropriate in the circumstances, provided the applicant is informed of this assumption and given a reasonable opportunity to respond.

Making a private ruling

Private rulings to be given to applicants

3.71 The Commissioner makes a private ruling by recording the ruling in writing and giving a copy of it to the applicant, either on paper or electronically. [Schedule 2, item 1, section 359-15 of Schedule 1 to the TAA 1953]

What a private ruling must contain

3.72 A private ruling must:

·
be in writing;
·
state that it is a private ruling;
·
specify the relevant scheme;
·
identify the entity to which it applies; and
·
identify the relevant provision to which it relates.

[Schedule 2, item 1, subsection 359-5(1) and section 359-20 of Schedule 1 to the TAA 1953]

3.73 A private ruling should state any assumptions the Commissioner has made in making the ruling, or additional information from another entity that has been relied on.

3.74 Where a provision relating to the making of a private ruling is not complied with, the ruling will still be a valid private ruling (per section 357-90, see paragraph 3.35). For instance, if the private ruling responding directly to a taxpayer's application does not state explicitly that it is a private ruling, this does not preclude a taxpayer from relying on the ruling.

When does a private ruling apply?

3.75 The private ruling may specify the time it begins to apply and the time it ceases to apply, for example, a specified income year. This can be any time (in the future or the past), but a ruling cannot retrospectively replace another ruling to the taxpayer's detriment. If the ruling does not specify the date (or refer to a specified event) from which it begins, then the ruling applies from when the ruling is made. [Schedule 2, item 1, subsections 359-25(1) to (3) of Schedule 1 to the TAA 1953]

3.76 If the private ruling does not specify an end time, it ceases to apply at the end of the income year or other accounting period in which it started to apply. The reason for having a deemed end time for a private ruling where no end time is specified is to provide certainty about the period covered by their ruling. If an end time is not provided, it could be argued that the private ruling applied for the length of operation of the scheme in question. Therefore, if the taxpayer and the Commissioner want a private ruling to apply indefinitely, the taxpayer should request that the Commissioner explicitly state that there is no end time for that ruling. [Schedule 2, item 1, subsection 359-25(4) of Schedule 1 to the TAA 1953]

Circumstances in which the Commissioner may decline to make a private ruling

3.77 The Commissioner must comply with an application to make a private ruling unless there is a basis to decline. [Schedule 2, item 1, subsection 359-35(1) of Schedule 1 to the TAA 1953]

3.78 The Commissioner may decline to make a private ruling if the Commissioner considers that;

·
making the ruling would prejudice or unduly restrict the administration of a taxation law;
·
the matter sought to be ruled on is already being, or has been considered by the Commissioner for the taxpayer; or
·
the matter sought to be ruled on is how the Commissioner would exercise a power under a relevant provision and the Commissioner decides to exercise the power (or not to).

[Schedule 2, item 1, subsections 359-35(2) and (3) of Schedule 1 to the TAA 1953]

3.79 The question of whether making the ruling would prejudice or unduly restrict the Commissioner's administration is a matter for the Commissioner. While the Commissioner is not expected to decline to rule lightly, a decision to decline is not reviewable under the tax law. However, it may be reviewable under the Administrative Decisions (Judicial Review) Act 1977.

3.80 Private rulings do not replace the Commissioner's decision -making power under the tax law, and applications should not be allowed to interfere with the proper administration of the tax law. If a taxpayer wants the Commissioner to exercise a particular power under the law, the appropriate course would normally be to ask the Commissioner to exercise that power, rather than to seek a ruling. For example, a taxpayer should normally ask the Commissioner for an extension of time to pay a tax -related liability rather than seeking a ruling on the issue. [Schedule 2, item 1, subsection 359-35(3) of Schedule 1 to the TAA 1953]

3.81 The Commissioner may also decline to make a private ruling where:

·
the Commissioner has asked the taxpayer to give further information under section 357 -105 and the taxpayer does not provide it in a reasonable time (see paragraph 3.39);
·
the Commissioner considers that information provided by an entity other than the applicant is material to the outcome of the ruling, but providing the ruling with that information would breach the tax secrecy provisions, privacy legislation or the confidentiality of the person providing the information (see paragraphs 3.40 to 3.45); or
·
an applicant does not agree to pay the amount charged by the Commissioner for a valuation, or a review of an applicant's valuation (see paragraph 3.90).

3.82 The purpose of these exclusions is to allow the Commissioner to focus efforts on increasing certainty for taxpayers in the most genuine and worthy cases. The ATO is not in the business of giving advice as a purely academic exercise, or assisting unscrupulous people to provide doubtful tax planning advice, or allowing some taxpayers to divert the ATO's resources to meet their needs to the detriment of others and the robustness of the system as a whole. Currently the ATO receives millions of requests for advice a year and only a fraction of them need to be dealt with in the formal private ruling system.

3.83 Examples where making a ruling would prejudice or unduly restrict the administration of a tax law include where:

·
the application is frivolous or vexatious or not seriously contemplated;
·
complying with the request for the private ruling would not have any practical consequences for the taxpayer, for example, because it relates to a transaction that occurred some years ago and the taxpayer's amendment period has already expired; or
·
making the private ruling would unreasonably divert resources from other matters to which the Commissioner must attend in the course of administering the taxation laws.

[Schedule 2, item 1, subsection 359-35(3) of Schedule 1 to the TAA 1953]

3.84 Other examples of circumstances in which the Commissioner might decline to give a private ruling include the following:

Scenario 1 A product ruling applies to Tim, and he asks for a private ruling on the same issue.

Scenario 2 Ingrid requests a private ruling where her liabilities or obligations will not be affected by the outcome of the ruling because the opportunity for her to act on the advice has passed.

Scenario 3 Alex, a scheme promoter, lodges a series of requests about the effectiveness of a number of tax avoidance schemes (so that it is unlikely he is seriously contemplating any one of them).

Scenario 4 Amanda asks for a private ruling about how the Commissioner would exercise the discretion to remit a penalty in hypothetical circumstances.

Scenario 5 Nicholas asks for a private ruling on whether a particular course of conduct will result in the Commissioner referring the circumstances to the Director of Public Prosecutions (DPP) for possible prosecution.

[Schedule 2, item 1, subsections 359-35(2) and (3) of Schedule 1 to the TAA 1953]

3.85 Where the Commissioner declines to give a private ruling, written reasons for doing so must be given to the applicant. [Schedule 2, item 1, subsection 359-35(4) of Schedule 1 to the TAA 1953]

Private ruling requiring a valuation

3.86 With private ruling requests which would require the determination of the value of any thing (which includes any property, service or intangible asset), the applicant may provide the Commissioner with a valuation or ask the Commissioner for a valuation.

3.87 Where the Commissioner is requested by the applicant to provide a valuation, the Commissioner may refer the valuation aspect of the ruling to a valuer. If the Commissioner refers the valuation to a valuer, the Commissioner must tell the applicant that this has occurred and must also tell the applicant when the valuer has completed its work. [Schedule 2, item 1, paragraph 359-40(1)(a) and subsections 359-40(2) and (3) of Schedule 1 to the TAA 1953]

3.88 Where the Commissioner is provided with a valuation by the applicant, the Commissioner may accept the valuation, or may refer it to a valuer for review. If the Commissioner refers the valuation to a valuer for review, the Commissioner must tell the applicant that this has occurred and tell the applicant when the valuer has completed its review work. [Schedule 2, item 1, paragraph 359-40(1)(b) and subsections 359-40(2) and (3) of Schedule 1 to the TAA 1953]

3.89 A typical situation where the Commissioner may accept a valuation provided with a private ruling application would be where the valuation or a similar valuation has been provided previously and was accepted by the Commissioner.

Example 3.3 Arif has previously received a valuation from a valuer in relation to the value of an investment property, which was accepted by the Commissioner. Arif subsequently applies for a private ruling and submits the valuation received from the valuer with his application for the Commissioner to consider.The Commissioner accepts the valuation without referring it for further review.

3.90 Where the applicant asks the Commissioner for a valuation, or provides the Commissioner with a valuation for review, the Commissioner may charge the applicant the relevant amount worked out in accordance with the regulations. Where a taxpayer does not agree to pay the relevant amount, the Commissioner will be unable to comply with the taxpayer's request for a private ruling requiring a valuation and the Commissioner may then decline to make the private ruling sought. A taxpayer who pays the charge can deduct the charge under section 25-5 of the Income Tax Assessment Act 1997 (ITAA 1997) as expenditure for managing their tax affairs. [Schedule 2, item 1, subsection 359-40(4) of Schedule 1 to the TAA 1953]

3.91 A private ruling request for the valuation of a gift or contribution for the purposes of Division 30 of the ITAA 1997 is not covered by section 359 -40, as Division 30 has valuation requirements specific to that Division. [Schedule 2, item 1, subsection 359-40(5) of Schedule 1 to the TAA 1953]

Making related rulings

3.92 Where the Commissioner is making a private ruling sought by an applicant, the Commissioner may make the ruling a ruling on a different provision (eg, a ruling on section 8-1 of the ITAA 1997 rather than section 51 of the ITAA 1936), or make an additional private ruling. The additional private ruling may be about the way in which another relevant provision or provisions would apply, or about how a relevant provision applies or would apply to a related scheme. [Schedule 2, item 1, section 359-45 of Schedule 1 to the TAA 1953]

3.93 However, Recommendation 2.16 of the Report stated that the Commissioner should refrain from ruling on issues not directly raised in a private ruling application without the applicant's agreement. This is to ensure timely responses and allow self assessing taxpayers to make their own judgements about tax obligations, notwithstanding that they have chosen to ask a question on another matter. Where the Commissioner considers that other aspects of the tax law could affect the accuracy of the private ruling response, the ruling should contain appropriate caveats or statements that the advice is issued subject to certain assumptions or limitations.

Example 3.4 Nan asks for a ruling about whether a receipt from an asset sale is ordinary income but in examining the ruling the ATO considers that there would also be capital gains tax implications. The ruling should address the income tax question, noting that there may be capital gains tax implications, but not addressing them.

Determining private rulings in a reasonable time

3.94 Once an applicant has lodged an application for a private ruling, it is important that the Commissioner rules within a reasonable time. The Report concluded that there ought to be a mechanism by which a taxpayer could crystallise the Commissioner's decision, in order to be able to decide whether or not to challenge it. As a result, if 60 days have passed since the ruling request was lodged and the Commissioner has not made the ruling or declined to rule, the applicant can give a written notice requiring the Commissioner to make the private ruling. [Schedule 2, item 1, subsection 359-50(1) of Schedule 1 to the TAA 1953]

3.95 If, 30 days after being given that written notice, the Commissioner has not made the ruling, or has not declined to make the ruling, then the applicant will have the right to object in the manner set out in Part IVC of the TAA 1953 and, as part of their objection, they must lodge their own draft private ruling. (This ruling will have no status at law apart from its role in the objection proceedings, and the applicant may not rely on it until and unless confirmed on objection or appeal.) [Schedule 2, item 1, subsections 359-50(3) and (4) of Schedule 1 to the TAA 1953]

3.96 However, if during the 60-day period the Commissioner requests that the applicant provide further information, tells the applicant about assumptions or information provided by a third party that the Commissioner proposes to take into account, or refers a valuation to a valuer, the 60-day period is extended as detailed in the table in subsection 359-50(2). Where two or more circumstances detailed in the table apply, any overlap between the periods of extension is ignored. [Schedule 2, item 1, subsection 359-50(2) of Schedule 1 to the TAA 1953]

Example 3.5 Victoria requests a private ruling. The Commissioner requests further information (under section 357-105) from Victoria 20 days after she lodges her application. Ten days later the Commissioner informs Victoria that he or she proposes to take into account information provided by a third party. Victoria responds to the Commissioner on both issues 25 days later.The 60 -day period mentioned in subsection 359 -50(1) is extended by 25 days. The period of overlap between the Commissioner's request for further information and the Commissioner informing Victoria that the Commissioner proposes to take into account information provided by a third party is ignored.

Making revised private rulings

3.97 The Commissioner may revise a private ruling if a private ruling was previously made and neither the scheme to which the earlier ruling relates, nor the income year or other accounting period, has begun. Where the scheme or the period to which the earlier private ruling related has begun, the ruling is not revised and the applicant would still be able to rely on it. The Commissioner may make a revised private ruling whether or not there is an application for the revised ruling. [Schedule 2, item 1, subsections 359-55(1) and (3) of Schedule 1 to the TAA 1953]

3.98 Where a revised private ruling is properly made, the private ruling in its initial form will stop applying to the applicant, and they will no longer be able to rely on it. [Schedule 2, item 1, subsection 359-55(4) of Schedule 1 to the TAA 1953]

3.99 Revised rulings must be copied to the applicant in the same way as other private rulings. [Schedule 2, item 1, subsection 359-55(2) of Schedule 1 to the TAA 1953]

Objection, review and appeal rights

3.100 There are two distinct avenues of objection, review and appeal rights in relation to private rulings:

·
a person may object against a private ruling that applies to that person [Schedule 2, item 1, subsections 359-60(1) and (2) of Schedule 1 to the TAA 1953] ; or
·
a person may object against the Commissioner's failure to make a ruling after being given a notice to make the ruling [Schedule 2, item 1, subsections 359-50(3) and (4) of Schedule 1 to the TAA 1953] .

Objection against private ruling

3.101 Where a person to whom a private ruling applies is dissatisfied with it, they may object against it in the manner set out in Part IVC of the TAA 1953, and the ruling will be a taxation decision for the purposes of that Part. [Schedule 2, item 1, subsections 359-60(1) and (2) of Schedule 1 to the TAA 1953]

3.102 A person cannot object against a private ruling if:

·
there is an assessment for them for the income year or other accounting period to which the ruling relates; or
·
the ruling relates to withholding tax or mining withholding tax that has become due and payable.

[Schedule 2, item 1, subsection 359-60(3) of Schedule 1 to the TAA 1953]

3.103 Where a taxpayer has received an assessment from the Commissioner and wishes to object against aspects of that assessment, that taxpayer must object against the assessment and not the private ruling. [Schedule 2, item 1, subsection 359-60(3) of Schedule 1 to the TAA 1953]

3.104 Having received the taxpayer's objection against a private ruling, the Commissioner is obliged under Part IVC of the TAA 1953 to consider it and either allow it in whole or part, or disallow it. This decision will constitute an objection decision that may be considered by the Administrative Appeals Tribunal or the Federal Court.

3.105 Where a taxpayer receives a private ruling which covers a number of income years or accounting periods there is nothing to prevent the taxpayer relying on the ruling for certain income years or accounting periods, and objecting against the others. A taxpayer may choose not to rely on the ruling instead of objecting against it.

Example 3.6 Ian receives a private ruling which covers 3 income years. Ian relies on the ruling for the first 2 income years, and then decides to object against the ruling for the 3rd income year before lodging his return for that year.

The Commissioner may consider new matters on objection

3.106 In deciding whether to allow an objection under Part IVC of the TAA 1953 against a private ruling, the Commissioner may consider any additional information that the Commissioner did not originally consider when making the ruling. For information which does not come from the taxpayer but which the Commissioner proposes to consider at the objection stage, the Commissioner must tell the taxpayer what this information is and give the applicant a reasonable opportunity to respond before allowing or disallowing the objection. [Schedule 2, item 1, subsections 359-65(1) and (2) of Schedule 1 to the TAA 1953]

3.107 However, if the Commissioner considers that the additional information is such that the scheme to which the application related is materially different from the scheme revealed by the additional information, the Commissioner must request the applicant to make an application for another private ruling and the taxpayer's objection is taken not to have been made. [Schedule 2, item 1, subsection 359-65(3) of Schedule 1 to the TAA 1953]

A successful objection decision will alter a ruling

3.108 A private ruling has effect as altered by an objection decision. [Schedule 2, item 1, section 359-70 of Schedule 1 to the TAA 1953]

Objection against Commissioner's failure to make a private ruling

3.109 If the Commissioner has not issued a ruling or declined to make the ruling within 60 days of the application being lodged, the applicant may give the Commissioner a notice requiring him or her to make the ruling. The 60-day period for the Commissioner to make the ruling before the applicant has a right to serve a notice can be extended by a range of actions the Commissioner takes, provided those actions are taken within 60 days of the application being made. The actions by the Commissioner that can extend the 60 days by the time it takes to receive a response are:

·
requesting further information from the applicant;
·
telling the applicant about assumptions that the Commissioner proposes to make;
·
telling the applicant about third party information that the Commissioner proposes to take into account; or
·
telling the applicant that the Commissioner has referred a valuation to a valuer.

3.110 If the Commissioner has not made the ruling or declined to make the ruling within 30 days of the notice requiring him or her to rule, the applicant may object against the failure to make the ruling. In lodging an objection an applicant is required to lodge a draft private ruling. [Schedule 2, item 1, subsections 359-50(3) and (4) of Schedule 1 to the TAA 1953]

3.111 Having received the taxpayer's objection against the failure to make a ruling, including their draft private ruling, the Commissioner must make a ruling in the same terms as the draft ruling lodged with the objection, or make a different private ruling. [Schedule 2, item 22, subsection 14ZY(1) of the TAA 1953]

3.112 If the Commissioner has not issued a ruling within 60 days of the objection against the failure to make a ruling being lodged, the Commissioner is taken to have disallowed the objection. [Schedule 2, item 24, subsection 14ZYB of the TAA 1953]

Example 3.7 Karen requests a ruling and, after 60 days have passed, requests the Commissioner to make the ruling. The ruling is not made within 30 days. Karen objects to the Commissioner's failure to make the ruling and lodges her own draft private ruling with the objection.

Oral rulings

What is an oral ruling?

3.113 An oral ruling is a form of binding advice that the ATO can provide in response to an individual's oral application. An individual or their legal personal representative (but not their tax agent), may apply to the Commissioner for an oral ruling on how, in the Commissioner's opinion, the tax law applies, or would apply, to them. As with public and private rulings, the ATO is legally bound by an oral ruling if the individual relies on that advice. [Schedule 2, item 1, section 360-5 of Schedule 1 to the TAA 1953]

3.114 Oral rulings differ from general advice given to taxpayers through services such as call centres. Oral rulings provide the individual with protection from additional primary tax and any penalties or interest that would otherwise be payable. Reliance on other oral advice given by the ATO provides protection only from penalties and interest. [Schedule 2, item 1, sections 357-60 and 361-5 of Schedule 1 to the TAA 1953]

Applying for an oral ruling

3.115 Any individual taxpayer may apply to the Commissioner for an oral ruling on how the Commissioner considers the law applies to them. A tax agent cannot apply for an oral ruling on a taxpayer's behalf. [Schedule 2, item 1, subsection 360-5(1) of Schedule 1 to the TAA 1953]

3.116 A taxpayer must apply for an oral ruling orally, in the manner the Commissioner has approved. [Schedule 2, item 1, subsection 360-5(2) of Schedule 1 to the TAA 1953]

3.117 The Commissioner will give the taxpayer or their legal personal representative the ruling orally, in a manner approved by the Commissioner. The Commissioner must provide the taxpayer with a registration identifier to distinguish oral rulings from other oral advice. [Schedule 2, item 1, subsections 360-5(3) and (4) of Schedule 1 to the TAA 1953]

3.118 A taxpayer is not entitled to receive a written record of the oral ruling. However, the taxpayer can later apply for a written private ruling on the same issue which can be binding if the prior ruling is disclosed (see paragraph 3.31). [Schedule 2, item 1, subsection 360-5(5) of Schedule 1 to the TAA 1953]

Making an oral ruling

Circumstances in which the Commissioner may decide not to make an oral ruling

3.119 The Commissioner must give the ruling unless the advice the taxpayer seeks relates to a business matter, is complex, or the matter to be ruled on is being, or has already been, considered by the Commissioner. [Schedule 2, item 1, subsection 360-5(3) of Schedule 1 to the TAA 1953]

3.120 Business is defined in the ITAA 1997 as including any profession, trade, employment, vocation or calling, but does not include occupation as an employee.

3.121 Examples of circumstances where the Commissioner might consider that an oral ruling relates to a complex matter include where:

·
the answer turns on the interpretation of facts that require examination of documents;
·
the facts and circumstances on which the answer is to be based are open to a number of possible interpretations;
·
the answer turns on a chain of decisions or conclusions to reach the final decision; or
·
the relevant law is complex and would require significant research or analysis.

3.122 The Commissioner may decide not to give an oral ruling if the matter sought to be ruled on is already being, or has been, considered for the person to whom the ruling would apply. This would include where an audit on the taxpayer's affairs is being undertaken or where the taxpayer has already been given a ruling on the matter. [Schedule 2, item 1, paragraph 360-5(3)(b) of Schedule 1 to the TAA 1953]

3.123 The Commissioner may give an oral ruling on matters of liability, administration, procedure, collection and ultimate conclusions of fact involved in the application of a tax law.

3.124 Paragraphs 3.38 to 3.45 discuss the ways in which the Commissioner can obtain information on which to base the ruling.

Withdrawal of an oral ruling

3.125 A taxpayer or their legal personal representative can withdraw an application for an oral ruling before the Commissioner makes the ruling. [Schedule 2, item 1, section 360-10 of Schedule 1 to the TAA 1953]

3.126 The rules set out in paragraph 3.31 apply where an oral ruling is inconsistent with a public ruling or a private ruling.

Commissioner determinations

3.127 The manner in which oral applications are made or withdrawn under section 360 -5 must be determined by the Commissioner in writing.

Other advice and general administrative practice

3.128 ATO advice and practice that does not fall into any category of ruling may also protect taxpayers from certain adverse consequences. At present, taxpayers are protected from certain shortfall penalties if they follow:

·
advice given to the taxpayer or their agent by the Commissioner;
·
the Commissioner's general administrative practice under the law; or
·
a statement in a publication approved in writing by the Commissioner.

3.129 The new provisions ensure that taxpayers will also be protected from both the shortfall interest charge and the general interest charge if:

·
they reasonably rely in good faith on non-ruling advice given to them or their agent by the Commissioner or a statement in a publication by the Commissioner, unless the advice or the statement or publication is labelled as non-binding; or
·
they reasonably rely in good faith on the Commissioner's general administrative practice.

[Schedule 2, item 1, subsection 361-5(1) of Schedule 1 to the TAA 1953]

3.130 General administrative practice will usually be established by the ATO having communicated consistently to a wide range of taxpayers on a particular issue. A general administrative practice is usually adopted for the efficient administration of the taxation system and will often be documented in a Law Administration Practice Statement, General Administration Law Administration Practice Statement, an ATO policy document (eg, the ATO Receivables Policy), or other precedential material (such as an ATO Interpretive Decision). An example is Law Administration Practice Statement PS LA 2003/8 which sets out the rules developed to lessen the cost of accounting for low cost assets for taxpayers carrying on a business. Where a draft public ruling represents the Commissioner's only public statement on an issue, the draft ruling will usually represent the Commissioner's general administrative practice.

3.131 A general administrative practice is not established merely because there are several similar private rulings on a matter, although evidence of a significant number of uncontradicted private rulings on a matter over time will tend to support such a conclusion. Similarly, a bare failure by the Commissioner to take some action within his power does not establish a general administrative practice, but a repeated failure to exercise that power after the issue is drawn to the Commissioner's attention will tend to do so. Again, mere silence or failure to issue a public ruling on a matter does not constitute general administrative practice, but it will be established where, following identification of an issue, ATO officers have accepted it as the basis on which taxpayers should treat the issue in a range of situations.

3.132 Although the provisions referred to in paragraphs 3.128 and 3.129 refer to penalty and interest being foregone, the Commissioner's acceptance that there has been a general administrative practice can also result in no further primary tax being payable. Where the Commissioner changes a general administrative practice in a way that is less favourable for taxpayers, he is not obliged to amend assessments that were raised consistently with a practice in place at a particular time. The Bill needs no special provision to bring this about because it is an inherent part of the Commissioner's general power to administer the tax laws to make judgments about what returns to review and amend. Accordingly, the Commissioner would commonly decide to make a change in general practice prospective where the new practice is less favourable for taxpayers. Furthermore, in some cases it would be appropriate for the new practice to start at a future date (eg, because taxpayers need time to adjust their accounting systems). However, consistent with the Report at page 13, the Commissioner would generally not take this approach where tax avoidance is involved or the previous practice has been exploited in an unintended way.

3.133 A taxpayer's protection from the general interest charge under subsection 361-5(1) will cease 21 days after the Commissioner notifies the taxpayer of the correct amount of tax payable under the law. This is consistent with the normal position under income tax that an amended assessment is due and payable 21 days after the Commissioner gives it to the taxpayer and general interest charge starts to accrue if it is not paid. If circumstances warrant (eg, if the liability is substantial and unexpected and the taxpayer has to significantly restructure their financial affairs to meet the payment), the Commissioner can defer the payment date (which also defers the date when the general interest charge can start to accrue). The Commissioner also has the power to remit the interest charge in whole or in part, particularly if the Commissioner contributed to the delay in payment and the taxpayer took reasonable action to mitigate the effects of the Commissioner's actions. [Schedule 2, item 1, subsection 361-5(2) of Schedule 1 to the TAA 1953]

3.134 Further, section 284 -215 to Schedule 1 of the TAA 1953 should be ignored in applying subsection 361-5(1) of this Bill. Section 284-215 treats you, for the shortfall penalty provisions, as having no shortfall if the shortfall is caused by you relying on ATO general administrative practice or certain ATO advice. If that section were not ignored, taxpayers may not obtain the intended interest protection because the protection mechanism refers to there being a shortfall amount (or scheme shortfall amount). [Schedule 2, item 1, subsection 361-5(3) of Schedule 1 to the TAA 1953]

Consequential amendments

Provisions in the current law that are no longer necessary

3.135 As a consequence of implementing the new framework for advice and rulings in Schedule 1 to the TAA 1953, the old tax rulings regime and the rulings provisions in a selected number of Acts will be repealed. Further flow on consequential amendments to a number of Acts are required to update or amend definitions and references to the old rulings regimes, so the law operates as intended. [Schedule 2, items 2 to 16, 18, 26 and 27 of Schedule 1 to the TAA 1953]

Objection periods to reflect changes to the advice and rulings regime

3.136 There have been some alterations and inserts to Part IVC of the TAA 1953 to correspond with the new advice and rulings regime. The consequential amendments allow taxpayers to object where the Commissioner fails to make a private ruling, and allow the taxpayer to lodge a draft private ruling with the objection. These changes are discussed in detail in earlier paragraphs (see paragraph 3.100 to 3.112). [Schedule 2, items 17 and 19 to 25 of Schedule 1 to the TAA 1953]

3.137 Where there is a taxation objection against the Commissioner failing to make a private ruling, and the Commissioner at the end of the relevant objection period does not make a private ruling in the same terms as the draft ruling lodged or make a different private ruling, the Commissioner is taken to have disallowed the objection. In this case, the taxpayer can apply to the Administration Appeals Tribunal or appeal to the Federal Court against the Commissioner's deemed disallowance of the objection. [Schedule 2, items 22, 24 and 25 of Schedule 1 to the TAA 1953]

Chapter 4 - Regulation impact statement

Background

4.1 Since 1986 -87, Australia has operated a system of self assessment of income tax. Under self assessment, taxpayers' returns are generally accepted at face value in the first instance and the Australian Taxation Office (ATO) may verify the accuracy of the return and, if necessary, amend an assessment within a prescribed period. From 1989 -90, the returns of companies and superannuation funds became subject to a system of full self assessment under which the taxpayer calculates their liability and pays their tax when lodging their return.

4.2 Before self assessment, taxpayers provided the ATO with relevant information and the ATO applied the law to assess their liabilities accordingly. Where taxpayers provided all relevant information, errors of fact could be corrected by the ATO but mistakes of law could not be. Under that system, the majority of risk and the cost of mistakes of law by the ATO were borne by all taxpayers. Self assessment relieved the ATO of the obligation to examine returns lodged by taxpayers and allowed the ATO to amend errors of calculation, mistakes of fact and mistakes of law after processing the initial assessment and collecting the tax payable or paying a refund. In some circumstances, returns may be re-opened many years after the original assessment. In this way, the introduction of self assessment shifted the balance of risk and uncertainty towards taxpayers. The change to self assessment meant that the ATO's resources could be used more efficiently, allowing more revenue to be collected for the same administrative cost.

4.3 Under self assessment, taxpayers may be uncertain about how the law applies to their circumstances. Uncertainty exposes taxpayers to costs (such as a requirement to pay additional tax, penalties and interest, or the costs of professional advice and litigation) if a shortfall is detected by the ATO. Uncertainty may have implications for taxpayer perceptions about the fairness of the tax system and consequently may affect the level of voluntary compliance by taxpayers. Finally, uncertainty about the tax consequences of a proposed transaction may have adverse economic implications, as taxpayers may be unwilling to enter into economically beneficial transactions if they are not able to obtain assurance about their taxation consequences.

4.4 In a Press Release on 24 November 2003 (No. 098), the Treasurer commissioned a review of aspects of the income tax self assessment system (the Review) to examine whether the right balance had been struck between protecting the rights of individual taxpayers and protecting the revenue for the benefit of the whole Australian community.

4.5 On 16 December 2004, the Treasurer announced the Government's response to the Report of Aspects of Income Tax Self Assessment (the Report) and released the Report to the public in Press Release No. 106. The Treasurer announced that the Government would adopt the 30 legislative recommendations made in the Report, and that the Commissioner of Taxation (Commissioner) had advised the Treasurer that the ATO would implement the relevant administrative recommendations as soon as practicable.

Specification of policy objective

4.6 The broad policy objective is to reduce the level of uncertainty for taxpayers and the risks and costs associated with self assessment, while preserving the capacity of the ATO to collect legitimate tax liabilities.

Implementation and analysis

4.7 The Review examined many aspects of the income tax assessment system and recommended:

·
improving certainty through providing for a better framework for the provision of ATO advice and introducing ways to make that advice more accessible and timely, and binding in a wider range of cases;
·
improving certainty by reducing the periods allowed for the ATO to increase a taxpayer's liability in a wide range of situations;
·
mitigating the interest and penalty consequences of taxpayer errors arising from uncertainties in the self assessment system; and
·
providing for future improvements through better policy processes, law design and administrative approaches.

4.8 An analysis of each aspect will not be addressed within this regulation impact report due to some of the measures, namely penalty and interest change, being dealt with in an earlier analysis.

General impact group identification

4.9 The measures will have an impact on all taxpayer groups (individual self -preparers, individuals who use tax agents, very small businesses, superannuation funds, trusts, partnerships, small and medium businesses and large businesses) and their advisers.

4.10 The proposals will also have an impact on the ATO as administrator of the tax law.

4.11 The total administrative cost of the following 2 measures is estimated to be $58.8 million over 4 years. The cost to revenue of these proposals is estimated to be $28 million over 4 years. Although these costs are considerable, the package will significantly benefit taxpayers.

Amendment of assessments

Specific objective

4.12 The objective is to ensure that the time during which taxpayers experience uncertainty about whether they have correctly self assessed their income tax liability more accurately reflects their risk profile and the revenue consequence of an error in their assessment.

Specific implementation options

4.13 Many individuals who are not in business and some very small businesses have straightforward tax affairs. While the law currently allows 4 years from the date of the original assessment to amend assessments for these taxpayers, the ATO generally completes its compliance activity for the vast majority within 2 years.

4.14 Subject to certain exceptions, the amendment period for increasing the liability of individuals and very small businesses is reduced from the present 4 years to 2 years. The 2 -year amendment period will exclude:

·
a taxpayer that carries on a business, or is a partner in a business, that is not in the STS;
·
a taxpayer that is a beneficiary of a trust estate at any time in that income year, unless the trust is an STS taxpayer or a full self assessment taxpayer (eg, a corporate unit trust, public trading trust or superannuation fund);
·
a taxpayer if, in that year, that taxpayer or another entity entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the taxpayer obtaining a scheme benefit in relation to income tax from the scheme for that year; and
·
other high risk or special cases prescribed by regulation.

4.15 Taxpayers with complex affairs, including businesses that are not in the simplified tax system (STS), will have a 4-year amendment period.

4.16 Fraud and evasion cases will continue to have an unlimited amendment period, as people who engage in calculated behaviour to evade tax should remain permanently at risk.

4.17 The proposed measure will also:

·
shorten the amendment period for the anti-avoidance provisions from 6 years to 4 years;
·
make the period during which the ATO can amend nil liability and loss cases equivalent to the period for amendments creating liabilities; and

4.18 Amendments to the existing law will apply to assessments for 2004-05 and later income years. Special transitional rules will apply in relation to nil liability returns for the 2003-04 income year and earlier income years.

Impact group identification and analysis

4.19 All taxpayers will potentially be affected by the changes.

Benefits

4.20 The proposed measure will change the periods during which assessments can be amended, providing additional certainty for taxpayers whose assessments are amended to create a liability (270,000 taxpayers in 2003 -04).

4.21 The time that elapses before an assessment can no longer be amended represents a major aspect of uncertainty for taxpayers. To the extent that this time can be reduced or made clearly known, the 'costs' of uncertainty will be reduced. Formalising a shorter period will increase certainty for a very large number of taxpayers at little cost. More specifically:

·
the period for the ATO to increase the liability of individuals and very small businesses would be reduced from 4 years to 2 years. All eligible individual non -business taxpayers (8 million) and STS taxpayers (425,000 small businesses) whose assessments are amended will potentially benefit from this measure.
·
the present 6-year amendment period for the Commissioner to give effect to the anti -avoidance provisions is abolished, so that a 4-year amendment period applies for taxpayers who seek a scheme benefit in relation to income tax.

Costs

4.22 Although a shorter period of review is proposed, this will not alter the record-keeping obligations for taxpayers. Therefore, the compliance costs are likely to remain unaffected.

4.23 These proposals are estimated to have a revenue cost of $28 million over 4 years.

4.24 The administrative costs of this proposal are estimated to be $35.8 million over 4 years, comprising $33.9 million over 4 years for the ATO and $1.9 million over 4 years for the Treasury.

4.25 Approximately $21.6 million will be required to improve the ATO's data collection process and the additional workload to maintain reliability. $12.3 million has been allocated to implement changes to the business system in order to capture and report losses.

ATO advice

Specific objective

4.26 The objective of reviewing the law is to improve the arrangements for a taxpayer to find out the Commissioner's view about how the taxation laws apply, so that the risks of uncertainty when they are self assessing are reduced.

Specific implementation options

4.27 The ATO provides taxpayers and tax practitioners with a range of advice on how to apply the income tax law, through formal rulings and other products. Currently, different types of ATO advice confer varying degrees of protection for taxpayers.

4.28 To address uncertainty, the Review proposed that all ATO advice provide a level of protection for taxpayers who have acted in good faith and have reasonably relied on advice that is later determined to be incorrect.

4.29 In the case of advice that is legally binding, taxpayers will be protected from amended assessments raising further primary tax, penalties and interest charges. In the case of any other written advice (unless that advice is clearly labelled non-binding) and oral advice provided by formal enquiry centres, taxpayers will be protected from penalty and interest charges. Taxpayers will receive similar protection where they act in accordance with long standing general administrative practice.

4.30 The categories of legally binding advice will be expanded to cover matters of administration, procedure and collection, and the Commissioner will be permitted to declare that other products for use by individual non -business self -preparers will provide the same protection as legally binding rulings.

4.31 Further amendments to existing law allow an individual non business taxpayer to apply for an oral ruling on how the tax law applies to them. Currently, a limited class of taxpayer may apply for an oral ruling on how the income tax law applies to them.

4.32 This measure replaces the existing provisions on rulings entirely. It makes certain categories of ATO advice (called rulings) legally binding on the Commissioner where taxpayers rely on rulings that apply to them. The categories of rulings are:

·
public rulings;
·
private rulings; and
·
oral rulings.

Public rulings

4.33 This measure expands the category of matters that a public ruling may deal with to cover matters of administration, procedure, collection and ultimate conclusions of fact. Thus the Commissioner may declare that advice provided for the general information of non-business self-preparers be binding.

Private rulings

4.34 Under the proposal, a range of changes will be made. These include:

·
expanding the category of matters on which private rulings can be provided;
·
providing an avenue for review where an application for a private ruling has not been determined within 60 days;
·
allowing the Commissioner to make reasonable assumptions in dealing with a private ruling request;
·
allowing the Commissioner to consider information other than that supplied by the applicant in making a private ruling, provided the applicant is informed;
·
clarifying the rules where rulings are inconsistent; and
·
allowing the Commissioner to take account of additional information supplied after making the private ruling application.

Oral rulings

4.35 This measure will extend the availability of oral rulings to all non -business issues raised by self-preparing individual taxpayers unless the issues are so complex that they would better be dealt with in writing.

Impact group identification and analysis

4.36 All taxpayers and their advisers would potentially be affected by the changes to the framework for ATO advice.

Benefits

4.37 Overall, these amendments to the existing provisions will improve:

·
the flexibility in communication methods between taxpayers and the ATO;
·
timeliness of the provision of rulings; and
·
certainty by making it clear that any written interpretive document the Commissioner publishes may be declared to be a public ruling.

4.38 This measure will have a positive effect on the responsiveness and reliability of ATO advice. Taxpayers should gain confidence that they are assessing their tax liabilities in line with the ATO's interpretation.

Costs

4.39 The administrative costs of these proposals, comprising additional funds for the ATO to improve quality and timeliness, are estimated to be $23 million over 4 years.

4.40 In particular, $8 million will be allocated to improving the timeliness of private rulings. Approximately $11 million has been allocated to improving the oral ruling system, including introducing a voice recording system.

4.41 There are not expected to be ongoing capital costs associated with this measure. Ongoing costs will only comprise operational and maintenance costs.

4.42 The revenue cost for the proposals is unquantifiable, but is unlikely to have a discernible impact against the forward estimates.

4.43 Taxpayers are not expected to incur additional compliance costs as a result of the proposed changes, except in circumstances where they apply for private rulings involving a valuation issue.

4.44 Where the taxpayer asks the Commissioner for a valuation, or provides the Commissioner with a valuation for review, the Commissioner may charge the applicant. However, this charge may simply replace the previous cost to the taxpayer of obtaining his or her own valuation.

4.45 Charges levied by the Commissioner with respect to valuations will be tax deductible for the taxpayer.

4.46 A cost recovery impact statement is currently being drafted by the ATO to evaluate the impact of the Commissioner charging for private rulings involving a valuation.

Consultation

4.47 The Review invited public submissions and there has been extensive consultation with tax practitioners, business groups and agencies with a governance role in the tax system (namely the Australian National Audit Office, the Commonwealth Ombudsman, Inspector General of Taxation, ATO and the Office of Small Business).

4.48 Consultation for the Review included:

·
The Review's discussion paper (released on 29 March 2004) outlined details for making a submission to the Review. The Review received over 30 comprehensive and detailed submissions from individuals, professional associations, companies and representatives of taxpayers.
·
A website containing information on the Review including details for contacting the Review, as well as an electronic registration form to receive a copy of the Review's discussion paper on its release.
·
The Review held consultative meetings with professional representatives around Australia.
·
All formal public submissions received were published on the Treasury website, when the Report was released on 16 December 2004.
·
Public consultation on the legislative provisions for these measures was conducted from February 2005 with industry groups and tax practitioners.

4.49 Submissions received by the Review indicated some criticism of existing legislation and identified some inadequacies in administering the law. These comments are summarised in the Report.

4.50 In addition, comments received about the draft legislation indicate the changes to existing law have broad support from industry groups, tax professionals and Government.

Conclusion and recommended option

4.51 It is expected that the range of measures will facilitate greater confidence and a certainty within the system. The amendments to the existing law replace the existing provisions on review periods and ATO advice entirely. While the measure should considerably improve certainty, it will not affect the capacity of the ATO to collect legitimate income tax liabilities.

4.52 The Treasury and the ATO will monitor the implementation of these measures, as part of the whole taxation system, on an ongoing basis.

Index

Schedule 1: Assessments

Bill reference Paragraph number
Item 1, item 1 in the table in subsection 170(1) 2.25
Item 1, item 1 in the table in subsection 170(3) 2.43
Item 1, paragraph (f) in column 3 of item 1, paragraph (e) in column 3 of item 2 and paragraph (d) in column 3 of item 3 in the table in subsection 170(1) 2.33
Item 1, item 2 in the table in subsection 170(1) 2.26
Item 1, item 2 in the table in subsection 170(3) 2.44
Item 1, item 3 in the table in subsection 170(1) 2.27
Item 1, item 4 in the table in subsection 170(1) 2.35
Item 1, item 5 in the table in subsection 170(1) 2.37
Item 1, subsections 170(1) and (2) 2.42
Item 1, subsection 170(3) 2.45
Item 1, subsection 170(4) 2.46
Item 1, subsections 170(6) to (8) 2.48
Items 3 to 7, subsection 170(10) 2.55
Item 6, section 170, subsection 170(1) 2.38
Item 8, subsection 170(13) 2.58
Items 9 to 13, subsection 170(14) 2.59
Item 14, section 170A 2.60
Items 15 and 19 2.61
Item 16, subsection 6(1) 2.50
Items 17 and 18, section 175A 2.53
Item 20, item 1 in the table in subsection 171A(1) 2.64
Item 20, item 2 in the table in subsection 171A(1) 2.65
Item 20, items 2 and 3, paragraph (a) in the table in subsection 171A(1) 2.68
Item 20, item 3 in the table in subsection 171A(1) 2.66
Item 20, item 4 in the table in subsection 171A(1) 2.67
Item 20 and item 4 in the table in subsection 171A(1) 2.68
Item 20, subsection 171A(2) 2.70
Item 21, subsections 170(9A), (9E) and (9F) 2.54
Items 21, 22, 26 and 27 2.71
Items 23, 24, 33, 34 and 36, subsections 251R(6F) and (6FA) of the ITAA 1936, subsections 18-100(1) and 388 -65(3), Schedule 1 of the TAA 1953 2.72
Items 25, 32 and 59 2.79
Item 28, paragraphs 14ZW(1)(aa) and (aaa) of the TAA 1953 2.74
Item 29, subsections 14ZW(1A) and (1AA) of the TAA 1953 2.75
Items 30 and 31, paragraphs 14ZW(1B)(b) and 14ZW(1BA)(b) of the TAA 1953 2.76
Items 35 and 37 2.80
Items 38 to 45, sections 161AA, 166, 166A, 168 and 169 of the ITAA 1936 2.77
Items 46 to 58, sections 18-15, 18 -20, 18-25, 18-27, 45-30 and 45 -865, Schedule 1 to the TAA 1953 and section 8K of the Taxation (Interest on Overpayments and Early Payments) Act 1983 2.78

Schedule 2: ATO advice

Bill reference Paragraph number
Item 1, section 357-55 of Schedule 1 to the TAA 1953 3.22
Item 1, sections 357-60 and 357-70 of Schedule 1 to the TAA 1953 3.30
Item 1, sections 357-60 and 361-5 of Schedule 1 to the TAA 1953 3.117
Item 1, subsection 357-60(1) of Schedule 1 to the TAA 1953 3.23
Item 1, paragraph 357-60(1)(b) of Schedule 1 to the TAA 1953 3.26
Item 1, subsection 357-60(2) of Schedule 1 to the TAA 1953 3.27
Item 1, section 357-65 of Schedule 1 to the TAA 1953 3.28
Item 1, section 357-70 of Schedule 1 to the TAA 1953 3.29
Item 1, subsection 357 -75(1) of Schedule 1 to the TAA 1953 3.31
Item 1, subsection 357 -75(2) of Schedule 1 to the TAA 1953 3.32
Item 1, section 357-80 of Schedule 1 to the TAA 1953 3.33
Item 1, section 357-85 of Schedule 1 to the TAA 1953 3.34
Item 1, section 357-90 of Schedule 1 to the TAA 1953 3.35
Item 1, section 357-95 of Schedule 1 to the TAA 1953 3.36
Item 1, section 357-100 of Schedule 1 to the TAA 1953 3.37
Item 1, section 357-105 of Schedule 1 to the TAA 1953 3.39
Item 1, section 357-110 of Schedule 1 to the TAA 1953 3.41
Item 1, section 357-115 of Schedule 1 to the TAA 1953 3.42
Item 1, section 357 -120 of Schedule 1 to the TAA 1953 3.45
Item 1, section 357-125 of Schedule 1 to the TAA 1953 3.46
Item 1, subsection 358-5(1) of Schedule 1 to the TAA 1953 3.47
Item 1, subsection 358-5(2) of Schedule 1 to the TAA 1953 3.49
Item 1, subsections 358 -5(2) and (4) of Schedule 1 to the TAA 1953 3.50
Item 1, subsection 358-10(1) of Schedule 1 to the TAA 1953 3.52
Item 1, subsection 358-10(2) of Schedule 1 to the TAA 1953 3.53
Item 1, section 358-15 of Schedule 1 to the TAA 1953 3.54
Item 1, section 358 -20 of Schedule 1 to the TAA 1953 3.55
Item 1, section 359-5 of Schedule 1 to the TAA 1953 3.61
Item 1, subsection 359-5(1) and section 359-20 of Schedule 1 to the TAA 1953 3.72
Item 1, subsection 359-10(1) and section 359-30 of Schedule 1 to the TAA 1953 3.67
Item 1, subsection 359 -10(2) of Schedule 2 to the TAA 1953 3.68
Item 1, subsection 359 -10(3) of Schedule 1 to the TAA 1953 3.69
Item 1, section 359-15 of Schedule 1 to the TAA 1953 3.71
Item 1, subsections 359-25(1) to (3) of Schedule 1 to the TAA 1953 3.75
Item 1, subsection 359-25(4) of Schedule 1 to the TAA 1953 3.76
Item 1, subsection 359-35(1) of Schedule 1 to the TAA 1953 3.77
Item 1, subsections 359-35(2) and (3) of Schedule 1 to the TAA 1953 3.78, 3.84
Item 1, subsection 359-35(3) of Schedule 1 to the TAA 1953 3.80, 3.83
Item 1, subsection 359-35(4) of Schedule 1 to the TAA 1953 3.85
Item 1, paragraph 359 -40(1)(a) and subsections 359-40(2) and (3) of Schedule 1 to the TAA 1953 3.87
Item 1, paragraph 359-40(1)(b) and subsections 359-40 (2) and (3) of Schedule 1 to the TAA 1953 3.88
Item 1, subsection 359-40(4) of Schedule 1 to the TAA 1953 3.90
Item 1, subsection 359-40(5) of Schedule 1 to the TAA 1953 3.91
Item 1, section 359-45 of Schedule 1 to the TAA 1953 3.92
Item 1, subsection 359-50(1) of Schedule 1 to the TAA 1953 3.94
Item 1, subsection 359-50(2) of Schedule 1 to the TAA 1953 3.96
Item 1, subsections 359-50(3) and (4) of Schedule 1 to the TAA 1953 3.95, 3.100, 3.110
Item 1, subsections 359-55(1) and (3) of Schedule 1 to the TAA 1953 3.97
Item 1, subsection 359-55(2) of Schedule 1 to the TAA 1953 3.99
Item 1, subsection 359-55(4) of Schedule 1 to the TAA 1953 3.98
Item 1, subsections 359-60(1) and (2) of Schedule 1 to the TAA 1953 3.100, 3.101
Item 1, subsection 359-60(3) of Schedule 1 to the TAA 1953 3.102
Item 1, subsections 359-65(1) and (2) of Schedule 1 to the TAA 1953 3.106
Item 1, section 359-70 of Schedule 1 to the TAA 1953 3.108
Item 1, section 360-5 of Schedule 1 to the TAA 1953 3.113
Item 1, subsection 360 -5(1) of Schedule 1 to the TAA 1953 3.115
Item 1, subsection 360 -5(2) of Schedule 1 to the TAA 1953 3.116
Item 1, subsection 360 -5(3) of Schedule 1 to the TAA 1953 3.120
Item 1, subsections 360 -5(3) and (4) of Schedule 1 to the TAA 1953 3.117
Item 1, paragraph 360-5(3)(b) of Schedule 1 to the TAA 1953 3.122
Item 1, subsection 360 -5(5) of Schedule 1 to the TAA 1953 3.118
Item 1, section 360 -10 of Schedule 1 to the TAA 1953 3.125
Item 1, subsection 361-5(1) of Schedule 1 to the TAA 1953 3.129
Item 1, subsection 361-5(2) of Schedule 1 to the TAA 1953 3.133
Item 1, subsection 361-5(3) of Schedule 1 to the TAA 1953 3.134
Items 2 to 16, 18, 26 and 27 of Schedule 1 to the TAA 1953 3.135
Items 17 and 19 to 25 of Schedule 1 to the TAA 1953 3.136
Item 22, subsection 14ZY(1) of the TAA 1953 3.111
Items 22, 24 and 25 of Schedule 1 to the TAA 1953 3.137
Item 24, subsection 14ZYB of the TAA 1953 3.112


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