Taxation Ruling

TR 2006/11DC2

Private rulings

• Please note that the PDF version is the authorised version of this draft ruling.
  This is a draft version of the updated Ruling issued for public comment. A version which has the changes from the original version tracked is available in the PDF version of this document

  For information about the status of this draft Ruling, see item 4246 on our Advice under development program

What this draft Ruling is about

1. This draft Ruling^[AA1] outlines the system of private rulings following the enactment of the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005. This Act implemented the government's response to the recommendations made in the Report on Aspects of Income Tax Self Assessment^[A1] (ROSA Report). In respect of private rulings, that Act inserted new Divisions 357 (common rules) and 359 (private rulings) into Schedule 1 to the Taxation Administration Act 1953 (TAA), the provisions of which are referred to in this Ruling.

1A. This Ruling also outlines the inclusion of indirect tax and excise rulings into the system of private rulings following the enactment of the Tax Laws Amendment (2010 GST Administration Measures No. 2) Act 2010. This implemented the government's response to the Board of Taxation's Review of the Legal Framework for the Administration of the Goods and Services Tax^[A2], which recommended harmonising the indirect tax rulings system with the general rulings system.

2. This Ruling considers:

(i)

what constitutes a private ruling;

(ii)

what is a relevant provision;

(iii)

what can be covered by a private ruling (including valuations and the general anti-avoidance rule);

(iv)

the status and binding effect of private rulings;

(v)

who may apply for a private ruling and who is covered by it;

(vi)

the form of application and information to be provided;

(vii)

the making of a private ruling;

(viii)

applications that do not have to be dealt with;

(ix)

the effect of inconsistent rulings;

(x)

revising private rulings;

(xi)

the status of private rulings following a rewrite of the law;

(xii)

the period for which a private ruling has effect;

(xiii)

delays in making private rulings;

(xiv)

the review of private rulings; and

(xv)

private rulings and the promoter penalty laws.

2A. All further legislative references in this Ruling are to Schedule 1 to the TAA, unless otherwise indicated.

Previous Rulings

3. The following rulings were withdrawn on and from 5 April 2006. To the extent that the Commissioner's views in these Rulings apply in respect of the new provisions, they have been incorporated in this Ruling.

•

Taxation Ruling TR 93/1 Income tax and fringe benefits tax: private rulings

•

Taxation Ruling TR 97/16 Income tax: status of taxation rulings following the income tax law rewrite

•

Taxation Determination TD 93/34 Income tax and fringe benefits tax: is there a withdrawal of a private ruling by a later inconsistent public ruling if the year of income or fringe benefits tax year to which the private ruling relates has (a) already ended or (b) commenced but not yet ended?

•

Taxation Determination TD 95/45 Income tax: self assessment: can a partnership make a valid application for a Private Ruling in terms of section 14ZAF of the Taxation Administration Act 1953 (TAA)?

•

Taxation Determination TD 96/5 Income tax: self assessment: can a person (the attorney) acting within the terms of a general power of attorney validly apply on behalf of the grantor of the power of attorney (the principal) for a private ruling on the way in which a tax law or tax laws will apply to the principal?

•

Taxation Determination TD 96/6 Income tax: self assessment: can a person obtain a private ruling in terms of Part IVAA of the Taxation Administration Act 1953 (TAA) for a year of income after the year ended 30 June 1992, where the question covered in the private ruling concerns depreciation deductions allowable in respect of plant acquired and used, or installed ready for use, before 1 July 1992?

•

Taxation Determination TD 96/16 Income tax: self assessment: can a person obtain a private ruling under Part IVAA of the Taxation Administration Act 1953 (TAA) on the question of whether that person is carrying on a business?

•

Product Grants and Benefits Ruling PGBR 2003/2 Product grants and benefits: private rulings.

3A. Goods and Services Tax Ruling GSTR 1999/1 Goods and services tax: the GST rulings system and Wine Equalisation Tax Ruling WETR 2002/1 Wine equalisation tax: the WET rulings system have been withdrawn with effect from 30 June 2010. To the extent that the Commissioner's views relating to private rulings in those rulings continue to apply under Divisions 357 and 359, they have been incorporated into this Ruling.

Ruling

What constitutes a private ruling?

4. A private ruling is a written expression of the Commissioner's opinion about the way in which a relevant provision applies or would apply to you. A private ruling must be in relation to a specified scheme.^[1]

5. The private ruling can either be one that has been applied for or it can be a 'related ruling'. Section 359-45 permits the Commissioner to make the private ruling applied for a private ruling on a different provision, or to make an additional private ruling to that sought by you. An example of the former would be making a private ruling on a new provision of the law where you had sought a private ruling on the superseded provision. If the Commissioner makes an additional private ruling, it may be about the way in which another relevant provision would apply in relation to the scheme, or about how a relevant provision would apply to a related scheme.

6. There is no obligation on the Commissioner to make an additional private ruling. Where a private ruling request is very specific in its application to a scheme and a particular relevant provision, the Commissioner may give a private ruling that does no more than express an opinion on that particular relevant provision.

6A. For example, you might ask for a private ruling on whether an amount derived from the sale of an asset is assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997). The Commissioner may give a private ruling that the amount is not assessable under section 6-5 of the ITAA 1997. This may occur even though the Commissioner might, if asked to consider the matter, consider that an amount (namely, a net capital gain calculated under Part 3-1 of the ITAA 1997) would be assessable as statutory income under section 6-10 of the ITAA 1997. However, because the ruling application did not draw attention to a possible alternative treatment, this question was not addressed.

7. Therefore, it is important for you to take care in the formation of the questions on which you are seeking a private ruling. For example, a question which seeks confirmation that an item of property sold during the year is a 'CGT asset' for the purposes of Division 108 of the ITAA 1997 may receive an affirmative private ruling. That private ruling does not represent confirmation that the capital gains tax provisions apply to the sale rather than, for example, section 6-5 of the ITAA 1997. If the author of the private ruling is aware of another provision that would apply to produce a different outcome, they would ordinarily advise you of this.

8. [Omitted.]

8A. [Omitted.]

What is a relevant provision?

9. The Commissioner can issue rulings only on relevant provisions. Relevant provisions are provisions of Acts and regulations administered by the Commissioner that are 'about' any of the matters listed in section 357-55. The list includes, for example, tax (paragraph 357-55(a)), fringe benefits tax (paragraph 357-55(c)), franking tax (paragraph 357-55(d)), withholding tax (paragraph 357-55(e)) and indirect tax (paragraph 357-55(fb)).

10. Only provisions of Acts and regulations administered by the Commissioner are directly covered by section 357-55. Therefore, for example, the Commissioner cannot directly rule on trust law or the common law relating to the creation of a new trust. Such matters are outside the scope of the relevant provisions on which the Commissioner can directly rule.^[5] However, the Commissioner may issue a private ruling on, for example, the capital gains tax consequences of the formation of a new trust. In making this ruling, the Commissioner might form a view that a new trust has or has not been created at common law for the purpose of coming to a view on the application of the capital gains tax provisions.^[6] In such a case, that ruling would be binding in relation to the application of the capital gains tax provisions, even though it is premised on a particular view about whether a new trust has been formed at common law (which might even turn out to be incorrect). However, the view expressed about whether a new trust has been created at common law is not, by itself, a ruling. Therefore, it would not be binding on the Commissioner in a context outside of the application of the capital gains tax provisions to the particular scheme addressed by the private ruling and the entity it is expressed to apply to.^[7]

10A. The Administrative Appeals Tribunal in Hamilton and Commissioner of Taxation^[7A] provides a further example. In that case, the Tribunal explained that the Commissioner is authorised and required to apply the International Organisations (Privileges and Immunities) Act 1963 and the relevant regulations when determining whether salary or wages or emoluments received from an international organisation is exempt income for income tax purposes. Once again, any views the Commissioner gives on how that Act applies are not binding outside the income tax context of the specific scheme covered by the private ruling and the entity it applies to.

11. The intention of the amendments implementing the ROSA Report is to enable the Commissioner to make private rulings on all the matters and circumstances in which private rulings have previously been made (for example, the extent of liability to income tax^[8], or the way in which a discretion of the Commissioner would be exercised in determining that liability^[9]). In addition, the Commissioner is authorised to make a private ruling to cover any aspect of the tax, levy, duty or entitlement covered by a relevant provision, including the collection and recovery of the tax, and its administration, or the administration or payment of a relevant grant or benefit.^[10] This includes the ability to make a private ruling with respect to the value of anything where that is required for the making of the private ruling (see paragraphs 17 and 18 of this Ruling).

12. The intention to allow rulings to be given in a very wide range of circumstances has been reflected in the use of the word 'about' in section 357-55, which has a very broad meaning. The word 'about' is not defined in the Income Tax Assessment Act 1936 (ITAA 1936) or ITAA 1997 but takes its ordinary meaning of 'concerning', 'connected with', 'on the subject of' or 'relating to'.^[11]

13. Therefore, a provision under which the extent of liability to the listed taxes, duties and levies is worked out is a provision 'about' them, as are provisions that are sufficiently relevant, or a necessary pre-requisite, to working out the liability. Similarly, a provision under which the extent of entitlement to the listed grants or benefits is worked out is a provision 'about' them, as are provisions that are sufficiently relevant, or a necessary pre-requisite, to working out the entitlement. Moreover, because private rulings are no longer restricted to provisions determining the extent of a liability or entitlement, the Commissioner may rule on how a provision applies to you even where the provision does not directly affect your liability or entitlement. Therefore, for example, a trustee may obtain a private ruling on whether a particular receipt of the trust is included in its net income, even though the private ruling may not affect the trustee's liability.

14. Provisions dealing with penalties for false or misleading statements, late payment of taxes, levies or duties or late lodgment of returns, are examples of provisions about the administration or collection of taxes, levies and duties. The same applies to provisions dealing with shortfall interest charge and general interest charge. Similarly, provisions dealing with, for example, franking credits and debits are about the administration or collection of franking tax.

What can be covered by a private ruling?

15. A private ruling deals with a specified scheme. 'Scheme' is widely defined to mean 'any arrangement', or 'any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise'.^[12] An 'arrangement' is defined to mean any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings.^[13]

15A. When making a private ruling, the decision-maker, on behalf of the Commissioner, identifies and specifies the scheme from the facts provided. The decision-maker then states an opinion on the way the law applies to that specified scheme. It is important that the Commissioner is provided with relevant information to enable this to be done as accurately as possible in the first instance. This is because any subsequent decision-maker considering the private ruling has limited capacity to review the facts and may not themselves engage in a fact-finding exercise.^[13A] Rather, a subsequent decision-maker must form their own view as to how a taxation law applies to the specified scheme they must take as a given.^[13B]

16. 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.^[14] This can include, where appropriate, matters such as how the Commissioner would apply discretions, 'safe harbours', and tax risk management policies in the context of the scheme. However, such matters can only be addressed to the extent that they are relevant to the application of the relevant provision. This is discussed in more detail in the context of public rulings in Taxation Ruling TR 2006/10 Public rulings at paragraphs 16A to 16D. Additionally, the Commissioner is able to provide a private ruling which covers the value of anything where it is necessary in dealing with the application of the law.

Private rulings and valuations

17. Valuations in private rulings are covered by section 359-40. Where your private ruling request requires the determination of the value of anything (including any property, service or intangible asset), you can provide a valuation or ask the Commissioner for a valuation. In either case, the Commissioner may refer the valuation aspect of the private ruling request to a valuer, and you may be charged for this in accordance with the regulations.^[14A] You will be advised if this occurs and when the valuer has completed the valuation work. The Commissioner is not obliged to obtain a valuation from a valuer. For example, if a valuation has been provided with the ruling request, the Commissioner may accept it without reference to a valuer if the valuation or a similar valuation has been previously provided and accepted by the Commissioner.

17A. The Commissioner cannot provide a private ruling to determine or confirm the appropriateness of a valuation methodology, or the market value of a future event.^[14B]

18. 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 specific valuation requirements which are only applicable to that Division.^[15] Providing a private ruling in these circumstances would generally constitute an unreasonable diversion of resources since a specific alternative mechanism for obtaining the valuation is provided by Division 30 of the ITAA 1997 and associated income tax regulations. Therefore, the Commissioner may decline to rule in these circumstances (see paragraph 39 of this Ruling).

Private rulings and the general anti-avoidance rules

18A. You can request a ruling on whether a general anti-avoidance rule^[15A], applies to a scheme. However, the operation of a general anti-avoidance rule is largely a question of fact, and relatively fine distinctions of fact can easily affect the answer. The operation of a general anti-avoidance rule may depend not only on the facts of the scheme to be implemented by you but also the correct identification of the alternative or alternatives reasonably available to you. Because any omission or misstatement of a material fact means a private ruling is not binding (as outlined in paragraph 19A of this Ruling), a high level of accuracy is required when specifying the relevant facts for the ruling to provide you with protection.

18B. Where a scheme has not been carried out, there can be practical issues with identifying the facts necessary to make the ruling. If, as may well be the situation where the scheme is yet to be implemented, making the ruling involves making an assumption, the Commissioner has a discretion whether to make the ruling (see paragraph 40AC of this Ruling). Generally, the Commissioner will not make a ruling about the application of a general anti-avoidance rule, especially in a case that is not otherwise straightforward, if there is any serious question whether the assumption will prove to be correct. Where there are grounds to suppose that the private ruling was sought to promote tax avoidance schemes, the Commissioner will consider declining to make the ruling on the ground that it will prejudice or unduly restrict the administration of a taxation law.^[15B]

18C. Nevertheless, even though the Commissioner may not make a ruling about the application of a general anti-avoidance provision for the reasons mentioned in paragraph 18B of this Ruling, the Commissioner will consider, in more general terms, the risk that it may apply and may inform you of the Commissioner's view. It is also the Commissioner's practice to inform you of the Commissioner's view on a general anti-avoidance rule applying, even if you have not requested a ruling on this point, where the facts related to a private ruling application on another tax provision give rise to a substantial risk of the general anti-avoidance rule applying. In cases of uncertainty, the Commissioner will follow the procedures in Law Administration Practice Statement PS LA 2005/24 Application of General Anti-Avoidance Rules.^[15C]

The status and binding effect of private rulings

19. A private ruling binds the Commissioner if the private ruling applies to you and you rely on the private ruling.^[16] In such a case, the Commissioner must not apply the provision covered by the private ruling in a way that is inconsistent with the private ruling to your detriment. However, if the scheme is not implemented in the way set out in the private ruling, or material facts were omitted from the private ruling application, or misleadingly or inaccurately stated, the private ruling does not bind the Commissioner.^[17]

19A. In BAC Holdings Limited v Commissioner of Taxation^[17A], the Court decided that a private ruling did not bind the Commissioner because the actual facts differed from those described in the ruling.

20. A private ruling applies to you if it is given in response to an application by you and the facts, assumptions or conditions set out in the ruling or accompanying documents are met.^[18] A private ruling applies for the specified period, so long as the law to which it relates remains in force. If no time is specified and the ruling is not an indirect tax or excise ruling then the ruling applies from when it is made until the end of the income year or accounting period in which it started to apply.^[18AA] If no time is specified and the ruling is an indirect tax or excise ruling then it continues to apply until it is either replaced by a later indirect tax or excise ruling or it is revised.^[18A] As discussed at paragraphs 51 to 53 of this Ruling, where the law is re-enacted or remade, the private ruling continues to apply insofar as the new law expresses the same ideas as the old law. If the law is repealed or amended to have a different effect, the private ruling ceases to apply.^[19]

21. The reason why a private ruling ceases to apply if the law is amended to have a different effect is because a private ruling on the way the Commissioner considers a relevant provision applies or would apply according to the state of the law as it then existed says nothing about how a materially altered version of that provision applies. This is the case irrespective of whether the amendment is to the provision itself or to another provision which effects a change to the operation of the original provision (see paragraph 23 of this Ruling for an example of this).

22. That is not to say that any amendment to (or affecting) a provision would render a private ruling on that provision inoperative. It is only if the amendment produces an effect which is different from the effect of the provision prior to the amendment that the private ruling ceases to apply (and therefore ceases to bind the Commissioner). If the private ruling given under the original provision would have been the same if the amendment had been made before the private ruling is given, then the private ruling is still applicable. If the private ruling ceases to apply because of the amendment, then the private ruling cannot be relied on.

23. This point can be illustrated by way of the following example. Subsection 8-1(1) of the ITAA 1997 provides a deduction for certain losses or outgoings. However, the operation of subsection 8-1(1) is directly affected by Division 26 of the ITAA 1997, which sets out some amounts which cannot be deducted. If a private ruling is made about how the Commissioner considers subsection 8-1(1) applies to a particular type of outgoing, and an amendment were later made to Division 26 denying a deduction for such outgoings, then the private ruling can no longer apply. This is the case even though the wording of subsection 8-1(1) has not itself been changed (rather, the effect of the provision has been changed by the amendment to Division 26). However, if the amendment to Division 26 is irrelevant to the issues addressed by the ruling, the ruling would still apply and would still bind the Commissioner. This is the case even if the ruling were later shown to represent an incorrect interpretation of the words of subsection 8-1(1).

24. You rely on a private ruling when you act (or omit to act) in accordance with it.^[19A] An example of demonstrating reliance by omitting to act is omitting to lodge a tax return in response to a private ruling stating that you do not have assessable income in the relevant year and therefore do not need to lodge a return.

25. You may rely on a private ruling at any time unless prevented from doing so by a time limit imposed by a taxation law (for example, the period of review for your assessment). Also, you may change your mind and stop relying on a private ruling at any time. Further, having stopped relying on that private ruling, you may rely on it again at a later time, again subject to any applicable time limits. You stop relying on a private ruling by acting, or omitting to act, in a way that is not in accordance with the private ruling.^[20]

26. Where you rely on a private ruling and the correct application of the relevant provision of the law actually gives a more favourable result for you, the Commissioner may nevertheless apply the correct view of the relevant provision as if you had not relied on the private ruling. For example, where the ruling determines an amount of a tax liability, the Commissioner will determine your liability in accordance with the private ruling unless the correct position under the law is more favourable to you than was set out in the private ruling. In such a case, the Commissioner may adopt the correct position even though you are relying on the private ruling. However, the Commissioner is not obliged to consider whether a more favourable outcome is available for you.^[21] Rather, the Commissioner may accept your self-assessment without further investigation.

27. Because the Commissioner may apply an interpretation of the law that is more favourable for you, a private ruling binds the Commissioner in the following ways if you choose to rely on it:

•

To the extent that a private ruling determines a tax liability, amount or an entitlement (or whether there is a tax liability, amount or an entitlement) under a relevant provision, the liability, amount or entitlement will be determined by the Commissioner in accordance with the private ruling. However, if the Commissioner concludes that the private ruling was wrong, they may adopt the correct position if it is more favourable than the private ruling.

•

To the extent that a private ruling expresses the Commissioner's opinion on an ultimate conclusion of fact for the purposes of a relevant provision (such as whether you are a resident), the Commissioner is bound to follow the expressed opinion, or may adopt the correct conclusion if that is more favourable.

•

To the extent that a private 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 private ruling to your detriment. However, the Commissioner may adopt an interpretation that is more favourable where that is the correct position.^[22]

Who may apply for a private ruling and who is covered by it?

28. You, your agent (which includes your tax agent) or your legal personal representative (which includes a person who holds a general power of attorney granted by you)^[23] may apply for a private ruling about how a relevant provision applies to you.^[24] Trustees may apply for private rulings about the affairs of the trust, and a partner (or other authorised person) may apply for private rulings for a partnership as agent of the partnership (and its partners).

29. The relevant provision must be capable of applying to you personally in order for you to be able to obtain a private ruling on it. So, for example, a private ruling on whether a person is considered to be an employee for the purpose of withholding under section 12-35 can be applicable only to the entity making the payment since that relevant provision applies only to the payer in determining the extent of their obligation to withhold instalments. The appropriate applicant for such a private ruling would therefore be the entity making the payment. The payee cannot apply for the ruling. On the other hand, a private ruling on whether a person is entitled to a deduction for car parking expenses having regard to subsection 51AGA(1) of the ITAA 1936 will require consideration of whether that person is an employee in the course of applying that provision to them. In this case, the person seeking the deduction can obtain a ruling on whether he or she is an employee for the purposes of that provision.

30. Usually the private 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 also applies to:

•

the beneficiaries of the trust if the ruling is not an indirect tax or excise ruling; and

•

to any replacement trustee provided the ruling would have applied to the former trustee (which it would not have if, for example, the scheme in respect of which the private ruling is made is not materially the same as the scheme actually implemented).^[25]

30A. An indirect tax ruling obtained by a member of a GST group, a participant in a GST joint venture, or an incapacitated entity may also apply to the representative member of the GST group, the joint venture operator of the GST joint venture or the representative of the incapacitated entity.^[25A] The Commissioner will only be bound by such a ruling in relation to the 'member entity' and the 'representative entity' if both entities rely on the ruling by acting or omitting to act in accordance with the ruling.^[25B]

30B. In the context of GST, the entitlement of a recipient of a supply to input tax credits, depends on the GST that is payable by the supplier. A private ruling issued to the supplier does not apply to the recipient of the supply. However, if it affects the treatment of the supply by the supplier who relies on it, it may correspondingly have an effect on the input tax credits that a recipient can claim.^[25C] This means that if a ruling is not relied upon by a supplier (for example, by the supplier acting inconsistently with it^[25D]), it does not impact and therefore has no effect for the recipient. Even if the effects of the ruling impact the recipient, the recipient is unable to object to the ruling.^[25E]

31. You may withdraw your application for a private ruling (orally or in writing) at any time before the ruling is made. The Commissioner must provide written confirmation of the withdrawal.^[26]

The form of application and information to be provided

32. An application for a private ruling must be in a form approved by the Commissioner.^[27] You need not apply on a standard form (in the sense of pre-printed stationery or a template), provided the application contains all the information the Commissioner requires in an application in order to be able to make the private ruling. Application forms are available on our website. These forms detail the information that is required by the Commissioner in order to deal with requests for private rulings.^[28]

33. If insufficient information is provided in the application, the Commissioner may consider further information is required in order to proceed. The Commissioner must ask for that information from you. You may also provide additional information after making the application. Where the Commissioner has asked you for additional information and it is not provided within a reasonable time, they may decline to rule (see paragraphs 39 to 40AB of this Ruling).^[29]

34. The Commissioner may also obtain additional information necessary for a private ruling from other parties, or make any assumptions that the Commissioner considers to be the most appropriate in the circumstances. However, you must be informed of the additional information or assumptions that the Commissioner intends to use and have a reasonable opportunity to comment or respond.^[30] Where disclosure by the Commissioner to you of any such additional information that is material to the outcome of the private ruling is not possible (for example, where disclosure would breach the confidentiality of the provider of the information), they may decline to rule (see paragraph 39 of this Ruling).

35. There will be circumstances where the application of a relevant provision to the particular scheme depends on a question of fact. For example, the application of many provisions depends on whether a business is being carried on. In such a case, you should ensure you have researched the factors that are relevant (for example, the factors described in Taxation Ruling TR 95/6 Income tax: primary production and forestry) and that the description of the scheme in the application contains sufficient information addressing all those factors (for example, the commercial viability of the activity).

36. Where the application is in respect of a proposed scheme, there is a real, practical risk in that differences may arise between the scheme dealt with by the Commissioner in a ruling and the scheme actually carried out. Where these differences are material, the private ruling given will not apply to the scheme as implemented (see paragraph 19 of this Ruling). In these circumstances, it may be possible to obtain another private ruling, which can be in respect of the scheme that is or was actually carried out.

The making of a private ruling

37. A private ruling is made by the Commissioner recording it in writing and providing a copy to you, either on paper or electronically.^[31] A private ruling must state that it is a private ruling, specify the relevant scheme, and identify the entity to whom it applies, and the relevant provision to which it relates.^[32]

38. Section 357-90 provides that the validity of a ruling is not affected merely by the fact that a provision relating to the form or the procedure for making it has not been complied with. Section 357-90 prevents, for example, the Commissioner asserting that a document clearly intended to be a private ruling is not in fact a private ruling merely because of a procedural or formal defect.

Applications that do not have to be dealt with

39. In the usual case where an application has been made in the approved form, the Commissioner is bound to make the private ruling. However, in the interests of allowing the Commissioner to focus efforts on increasing certainty for entities in the most genuine and worthy cases, the Commissioner may decline to rule in certain situations.^[33] Situations where the Commissioner may decline to rule are as follows.^[34]

Making the ruling would prejudice or unduly restrict the administration of a taxation law

39A. The Commissioner may decline to rule where the Commissioner considers that making the ruling would prejudice or unduly restrict the administration of a taxation law. Examples include where:

•

the application is frivolous or vexatious or not seriously contemplated (such as a request where the scheme is merely hypothetical);

•

provision of a private ruling would not have any practical consequences for you (such as where a product ruling already applies to you, or where the transaction has already occurred in an income year for which the amendment period has expired, or the ruling relates to a past income year and the transaction as a matter of historical fact was not entered into in that year)^[38A];

•

you do not agree to pay the amount charged for a valuation^[38B];

•

the Commissioner considers that information provided by a source other than you is material to the outcome of the ruling, but disclosure of that information to you would breach tax secrecy provisions, privacy legislation or the confidentiality of the person providing the information (see paragraph 34 of this Ruling)^[38C]; or

•

making the private ruling would require an unreasonable diversion of the Commissioner's resources from other matters which must be attended to in the course of administering the taxation laws.

39B. The power to decline to rule in such situations recognises that 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 entities to divert the ATO's resources to meet their needs to the detriment of others and the robustness of the system as a whole.^[38D]

The ruling sought deals with a matter that is already being, or has already been, considered

39C. The Commissioner may decline to rule where the matter is already being considered, or has been considered by the Commissioner for you. This includes where you already have a private ruling on the matter, where the matter has already been decided for the purposes of a Commissioner's assessment, where the matter is the subject of a tax audit, or the matter is the subject of an objection against an assessment. In the case of a discretion, it will include circumstances where the Commissioner considers whether or how to exercise the discretion (refer to paragraph 39D of this Ruling).

The ruling sought is how the Commissioner would exercise a power

39D. The Commissioner can decline to make a private ruling if the issue is about how a power would be exercised under the law, and the proper approach is simply for the Commissioner to exercise or not exercise that power. If you want the Commissioner to exercise a particular power under the law, this should normally be by way of asking them to do this rather than by seeking a private ruling. For example, you should normally ask the Commissioner for an extension of time to provide a required approved form under section 388-55 rather than seeking a ruling on the issue. This is to be distinguished from the situation where you are seeking a private ruling about how the Commissioner would exercise a discretion at a future time in relation to the scheme specified.

The Commissioner has asked you for additional information and it is not provided within a reasonable time

40. The Commissioner may also decline to rule where the Commissioner has asked you for additional information and it is not provided within a reasonable time (see paragraph 33 of this Ruling).

40AA. In Commissioner of Taxation v Hacon Pty Ltd^[39AAA], the Full Federal Court considered that the Commissioner cannot decline to rule merely because the Commissioner requires something more to make the ruling requested by the applicant.

40AB. However, if the information is requested and isn't provided within a reasonable time, the Commissioner may refuse to rule.

The correctness of the ruling depends on assumptions about future events

40AC. The Commissioner can also decline to rule if the correctness of the private ruling would depend on making assumptions about a future event or other matter.^{[39AAB] [39AAC]} This includes situations where giving a ruling would require knowing possible future events, circumstance and their consequences for the arrangement. Also included are situations where knowledge of past events is needed to rule, but records or knowledge of those past events have been lost or not kept.

40AD. Note that the Commissioner is not obligated to first request information in relation to such future events or other matters from you in those circumstances.^[39AAD]

The ruling sought is on the Australian IIR tax/UTPR tax or Australian DMT tax

40A. The Commissioner may decline to rule where the Commissioner considers that it would not be reasonable to comply with the application, where the relevant provision to which the application relates is in respect of^[39AB]:

•

Australian IIR tax (income inclusion rule tax);

•

Australian UTPR tax (undertaxed profits rule tax); or

•

Australian DMT tax (domestic minimum top-up tax).

40B. The ability of the Commissioner to decline to rule under paragraph 359-35(2)(c) is broad.^[39AC] Examples of when the Commissioner may decline to rule under this provision include^[39AD]:

•

where the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting (Inclusive Framework) has published guidance relating to the matter, which the government is planning on incorporating into domestic law but has not yet done so;

•

where the matter relates to an issue that the Inclusive Framework has identified as requiring guidance, or for which it is drafting guidance and has yet to publish an agreed version of that guidance; or

•

where the issuing of a ruling would require the Commissioner to consider how other jurisdictions apply their respective domestic tax laws.

The effect of inconsistent rulings

41. Where there are inconsistent rulings that both apply to you, section 357-75 sets out rules for determining which ruling may be relied upon, to the extent of the inconsistency. Rulings will not be inconsistent to the extent to which they apply to different schemes or to different time periods (such as different income years).

41A. To the extent inconsistent rulings deal with indirect tax or excise issues, the indirect tax and excise rules apply (refer to paragraphs 48A and 48B of this Ruling). To the extent inconsistent rulings deal with other issues, the rules for rulings other than indirect tax or excise rulings apply (refer to paragraphs 42 to 48 of this Ruling).^[39A]

Rulings other than indirect tax or excise rulings

42. As a general principle, you may always choose to rely on a public ruling that applies to you and may choose to rely on a private or oral ruling that specifically addresses your circumstances provided the private or oral ruling applies to you. (Paragraph 49 discusses the situation if the private ruling has been revised.) So, if there is an apparent inconsistency between a later applicable private ruling and an earlier public ruling, you may choose which ruling you wish to rely on. Similarly, if there is an inconsistency between two public rulings, each of which applies to you, you may rely on either ruling.

43. However, there are special rules which limit your ability to rely on a private ruling if it is inconsistent in some respect with a later public, private or oral ruling.

44. If the private ruling is inconsistent with a later public ruling, the earlier private ruling is taken not to have been made if, when the public ruling is made, the following two conditions are met:

(i)

the income year or other period to which the rulings relate has not begun; and

(ii)

the scheme to which the rulings relate has not begun to be carried out.^[40]

45. This allows the correction of an erroneous private or oral ruling by the issue of a later public ruling, but only where you have not already entered into the scheme and the relevant income year or accounting period has not commenced. If you have already entered into the scheme, or the relevant income year or accounting period has commenced, then you may rely on either ruling (see paragraph 42 of this Ruling).

46. If an earlier private ruling is inconsistent with a later private or oral ruling, the earlier ruling is taken not to have been made if you informed the Commissioner of the existence of the earlier ruling when applying for the later ruling. If you did not inform the Commissioner about the earlier ruling, the later ruling is taken not to have been made.^[41]

47. Where there are three or more inconsistent rulings, the rules in paragraphs 44 to 46 of this Ruling should be applied to each combination of two rulings in the order in which they are made, to determine whether any of the rulings are taken not to have been made, and then to determine which of the remaining rulings you can rely on.

48. [Omitted.]

Indirect tax or excise rulings

48A. If there are two inconsistent indirect tax or excise rulings that apply to an entity and at least one of the rulings is a private ruling then, to the extent of the inconsistency, the later ruling is taken to apply from the later of the time it is made and the time (if any) specified in the ruling as being the time from which it begins to apply. The earlier ruling, to the extent of the inconsistency, is taken to cease to apply at that later time.^[42A]

48B. Where there are three or more inconsistent indirect tax or excise rulings, the rules in paragraph 48A of this Ruling should be applied to each combination of two rulings in the order in which they are made, to determine which ruling the entity can rely on for a particular period of time.

Revising private rulings

Rulings other than indirect tax or excise private rulings

49. An existing private ruling may be revised by the Commissioner, but only where the scheme to which that original private ruling relates has not begun to be carried out and the relevant income year or accounting period has not begun. Such a revision may be made whether or not there is an application for a revised private ruling. Unless the revised private ruling specifies a different start date, it applies to you from the time it is made (that is, when a copy of it is given to you). The original private ruling no longer applies and therefore cannot be relied upon.^[43AA]

50. A private ruling can also be taken not to have been made where a subsequent inconsistent public ruling is made before either the scheme or the income year (or accounting period) relevant to the private ruling have started (see paragraph 44 of this Ruling).

Indirect tax or excise private rulings

50A. An existing indirect tax or excise private ruling may be revised by the Commissioner. Such a revision may be made whether or not there is an application for a revised private ruling.^[43A] Unless the revised private ruling specifies a later start date, it applies to you from the time it is made (that is, when a copy of it is given to you). From that time the original private ruling no longer applies and therefore cannot be relied upon.^[43B]

The status of private rulings following a rewrite of the law

51. Where a relevant provision is re-enacted or remade, an earlier private ruling is taken to be about the re-enacted or remade provision insofar as the new law expresses the same ideas as the old law.^[44] However, if the law has been substantively changed, the part of the private ruling dealing with the changed law ceases to apply.

52. Therefore, for schemes commencing on or after the date of effect of the new law, you can continue to rely on existing private rulings which deal with the old law if the new law expresses the same ideas as the old law. If the old law has been replaced by a new law which does not express the same ideas, then the part of the private ruling on that old law does not apply in relation to the new law. That is, that part of the private ruling will not apply to schemes entered into on or after, or extending beyond, the date of effect of the new law.

53. In deciding whether the new law expresses the same ideas as the old law, you can normally assume there has been no change in those ideas unless announced otherwise. Ways in which a change may be announced include:

•

the explanatory memorandum, second reading speech, or other relevant extrinsic material relating to a Bill which is re-enacting or remaking the particular provisions;

•

a tribunal or court decision (not under appeal) which makes it clear that there has been a change in ideas; and

•

a public announcement by the ATO that there has been a change in ideas – for example, by way of a taxation ruling, taxation determination, media release or other ATO publication.

The period for which a private ruling has effect

54. A private ruling will usually specify the time it begins to apply and the time it ceases to apply. The specified start or end time of a private ruling may be before, when or after the private ruling is made. This time may be specified by reference to the occurrence of a particular event (for example, commencement of the relevant scheme). Where no date or event is specified, the private ruling applies from when it is made. If no end time is specified and the ruling is not an indirect tax or excise ruling it ceases to apply at the end of the income year or accounting period in which it started to apply.^[45] If no end time is specified and the ruling is an indirect tax or excise ruling it continues to apply until it is either replaced by a later indirect tax or excise ruling or it is revised.^[45A]

Delays in making private rulings

55. Where you have applied for a private ruling and the Commissioner has not made the ruling (nor declined to rule) within 60 days of the application being lodged, you may give a notice to the Commissioner to make the private ruling. You may lodge an objection if the Commissioner has failed to make a private ruling (or declined to rule) within 30 days of being given such a notice. In lodging this objection, you must also lodge your own draft private ruling.^[46]

56. Certain actions by the Commissioner within the 60-day period have the effect of extending that period, including:

•

requesting further information from you;

•

telling you about assumptions the Commissioner proposes to make or additional information that is proposed to be taken into account; and

•

referring a valuation matter to a valuer.^[47]

57. The effect of your own draft private ruling mentioned in paragraph 55 of this Ruling is as follows. The draft private ruling does not by itself have any effect. However, as a result of the objection, the Commissioner must either make a private ruling in the same terms as your draft, or make a different one.^[48] If the Commissioner fails to do either of these, in the usual case, by the end of 60 days after lodgment of the objection, the objection is taken to have been disallowed.^[49] However, this deemed disallowance of the objection against the Commissioner's failure to rule does not mean that the draft private ruling lodged with your objection takes effect, or that you can have that draft ruling considered by the Federal Court or the Administrative Review Tribunal in any review or appeal against the disallowance.

The review of private rulings

58. You may object against a private ruling which applies to you if you are dissatisfied with it in the manner set out in Part IVC.^[50] From 1 July 2010, this includes private indirect tax rulings. There are time limits associated with lodging an objection against a private ruling.^[50A]

58A. However, there are three instances where a private ruling may not be objected against:

•

where an assessment has been made in respect of the year of income or other accounting period covered by the private ruling.^[50B] In this situation you can have the matter dealt with in the private ruling reviewed by lodging an objection against the relevant assessment or amended assessment;

•

where the private ruling relates to withholding tax or mining withholding tax that has become due and payable; and

•

where the private ruling relates to excise duty or another amount payable in relation to goods under an excise law and the Commissioner has made a decision about the excise duty, or other amount, payable in relation to those goods and the decision is reviewable under an excise law.

59. Where an objection against a private ruling is allowed to some extent, the private ruling is taken to have been altered in accordance with the objection decision once the period in which an appeal against, or an application for the review of, the decision may be made has ended without such an appeal or application being made.^[51] If the objection is disallowed to any extent you may have the objection decision considered by the Federal Court or the Administrative Review Tribunal.^[52]

60. In considering an objection against a private ruling, the Commissioner may consider additional information that was not considered at the time of making the private ruling. Where additional information will be considered and it comes from a source other than you, the Commissioner must tell you what this information is and give you a reasonable opportunity to comment or respond before allowing or disallowing the objection.^[54]

61. 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, they must ask you to make an application for a different private ruling. Your objection is taken not to have been made in these circumstances.

61A. If an objection decision has already been made on a private ruling, you can only object to the relevant assessment on new grounds that were not, and could not have been, raised in the original objection.^[55] This avoids duplication of objections.

Private rulings and the promoter penalty laws

61B. Under the promotor penalty laws^[56], the Commissioner may apply to the Federal Court for sanctions, remedies (or both) to address conduct concerning the:

•

promotion of schemes on the basis of conformity with a private ruling if the scheme is materially different from that described in the ruling; and

•

implementation of schemes, that have been promoted on the basis of conformity with a private ruling, in a way that is materially different from that described in the ruling.

61C. The Commissioner has issued Law Administration Practice Statement PS LA 2021/1 Application of the promoter penalty laws, setting out the administrative procedures that are used in applying the promoter penalty laws.

Date of effect

62. The updates that are the subject of this Ruling are proposed to apply both before and after the date of issue of the addendum that gives effect to them.

Commissioner of Taxation
11 February 2026

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Appendix 1 – Detailed contents list

63. The following is a detailed contents list for this Ruling:

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Appendix 2 – Your comments

64. You are invited to comment on this draft Ruling including the proposed date of effect. When the final Addendum issues, it is proposed to apply both before and after its date of issue.

65. Please forward your comments to the contact officer by the due date.

66. A compendium of comments is prepared when finalising this Ruling, and an edited version (names and identifying information removed) is published to the Legal database on ato.gov.au

67. Please advise if you do not want your comments included in the edited version of the compendium.

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© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

References

ATO references:
NO 2005/16696; 1-15320C2H; 1-188CS12J

Previous Rulings/Determinations:
PGBR 2003/2W
TD 93/34W
TD 95/45W
TD 96/5W
TD 96/6W
TD 96/16W
TR 93/1W
TR 97/16W
GSTR 1999/1W
WETR 2002/1W

Related Rulings/Determinations:

TR 95/6
TR 2006/10
TR 2011/5

Business Line:  OCTC

Legislative References:
TAA 1953 Pt IVAA
TAA 1953 14ZW(1AAC)
TAA 1953 14ZW(1A)
TAA 1953 14ZW(2)
TAA 1953 14ZX
TAA 1953 14ZY(1)
TAA 1953 14ZYB
TAA 1953 14ZYB(1)(b)
TAA 1953 former 14ZAE
TAA 1953 former 14ZAF
TAA 1953 Sch 1 12-35
TAA 1953 Sch 1 105-60
TAA 1953 Sch 1 Div 290
TAA 1953 Sch 1 Div 357
TAA 1953 Sch 1 357-55
TAA 1953 Sch 1 357-60
TAA 1953 Sch 1 357-60(1)
TAA 1953 Sch 1 357-60(3)
TAA 1953 Sch 1 357-60(5)
TAA 1953 Sch 1 357-60(6)
TAA 1953 Sch 1 357-65
TAA 1953 Sch 1 357-70
TAA 1953 Sch 1 357-75
TAA 1953 Sch 1 357-75(1)
TAA 1953 Sch 1 357-85
TAA 1953 Sch 1 357-90
TAA 1953 Sch 1 357-105
TAA 1953 Sch 1 357-110
TAA 1953 Sch 1 357-115
TAA 1953 Sch 1 357-120
TAA 1953 Sch 1 Div 359
TAA 1953 Sch 1 359-5
TAA 1953 Sch 1 359-5(1)
TAA 1953 Sch 1 359-5(2)
TAA 1953 Sch 1 359-10(1)
TAA 1953 Sch 1 359-10(2)
TAA 1953 Sch 1 359-10(3)
TAA 1953 Sch 1 359-15
TAA 1953 Sch 1 359-20
TAA 1953 Sch 1 359-25
TAA 1953 Sch 1 359-30
TAA 1953 Sch 1 359-35
TAA 1953 Sch 1 359-35(2)
TAA 1953 Sch 1 359-35(3)
TAA 1953 Sch 1 359-40
TAA 1953 Sch 1 359-40(5)
TAA 1953 Sch 1 359-45
TAA 1953 Sch 1 359-50
TAA 1953 Sch 1 359-50(2)
TAA 1953 Sch 1 359-55
TAA 1953 Sch 1 359-55(4)
TAA 1953 Sch 1 359-55(5)
TAA 1953 Sch 1 359-60
TAA 1953 Sch 1 359-60(1)
TAA 1953 Sch 1 359-65
TAA 1953 Sch 1 359-70
TAA 1953 Sch 1 388-55
ITAA 1936 51AGA(1)
ITAA 1936 170BC
ITAA 1936 170BDA
ITAA 1936 170BDB
ITAA 1936 170BDC
ITAA 1936 170BF
ITAA 1936 Part IVA
ITAA 1997 6-5
ITAA 1997 6-10
ITAA 1997 8-1(1)
ITAA 1997 995-1(1)
ITAA 1997 Pt 3-1
ITAA 1997 Div 26
ITAA 1997 Div 30
ITAA 1997 Div 108
ANTS(GST)A 1999 Div 165
Product Grants and Benefits Administration Act 2000 8
Tax Laws Amendment (2010 GST Administration Measures No. 2) Act 2010 Sch 2 46(2)
Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 Sch 2 Pt 3
Taxation Administration Regulations 2017 68

Cases relied on:
BAC Holdings Limited v Commissioner of Taxation
[2020] FCA 413
2020 ATC 20-738

Baya Casal v Deputy Commissioner of Taxation
[2025] FCA 87
2025 ATC 20-947
122 ATR 177
Commissioner of Taxation v Eichmann
[2019] FCA 2155
2019 ATC 20-728
Eichmann v Commissioner of Taxation
[2020] FCAFC 155
2020 ATC 20-762
280 FCR 10
112 ATR 246
Commissioner of Taxation v Hacon Pty Ltd
[2017] FCAFC 181
2017 ATC 20-639
253 FCR 355
106 ATR 863
Commissioner of Taxation v McMahon, Brian John, Deputy President, The Administrative Appeals Tribunal & Anor
[1997] FCA 1087
79 FCR 127
37 ATR 167
97 ATC 4986
CTC Resources NL v The Commissioner of Taxation for the Commonwealth of Australia
[1994] FCA 76
120 ALR 197
27 ATR 403
94 ATC 4072
48 FCR 397
Hamilton and Commissioner of Taxation
[2020] AATA 1812
2020 ATC 10-537
111 ATR 725
The Public Servant and Commissioner of Taxation
[2014] AATA 247
2014 ATC 1-064
97 ATR 135
Rosgoe Pty Ltd v Commissioner of Taxation
[2015] FCA 1231
2015 ATC 20-539
XRXR and Commissioner of Taxation
[2025] ARTA 357

Other References:
Explanatory Memorandum to the Tax Laws Amendment (2010 GST Administration Measures No. 2) Bill 2010
Explanatory Memorandum to the Tax Laws Amendment (Improvements to Self Assessment) (No. 2) Bill 2005
Explanatory Memorandum to the Treasury Laws Amendment (Multinational – Global and Domestic Minimum Tax) (Consequential) Bill 2024
PS LA 2003/7
PS LA 2005/19
PS LA 2005/24
PS LA 2008/3
PS LA 2021/1
The Board of Taxation (2008) Review of the Legal Framework for the Administration of the Goods and Services Tax, https://taxboard.gov.au/consultation/legal-framework-for-the-administration-of-the-gst
Treasury (2004) Report on Aspects of Income Tax Self Assessment, https://treasury.gov.au/publication/p2004-aspects-income-tax-self-assessment
The Macquarie Dictionary, 2001, rev. 3rd edn, The Macquarie Library Pty Ltd, NSW
The Australian Oxford Dictionary, 1999, Oxford University Press, Melbourne