COMPLIANCE
ATO guidance road test The ATO provides a vast array of guidance material aimed at assisting taxpayers. Daniel Butler lists and examines the effectiveness of each of these items.
DANIEL BUTLER is a director at DBA Lawyers.
The ATO is a large bureaucracy and produces a lot of guidance material. Generally the regulator feels bound by its published material from an administrative viewpoint. However, only certain publications bind the ATO. Thus, it is important advisers and taxpayers understand the range of material, or products, published by the ATO and the level of protection each provides. For example, a tax ruling is generally binding on the regulator. As discussed, the ATO’s general administrative practice is that it feels bound to follow its own written materials, but in the event it is wrong, the tax still remains payable but penalties may be remitted. In particular, only certain documents provide a ‘precedential ATO view’. This is the regulator’s documented view about the application of any of the law administered by it in relation to a particular interpretative issue. The ATO has precedential views to ensure its decisions on interpretative issues are accurate and consistent. Practice Statement Law Administration (PS LA) 2003/3 states that precedential ATO views are set out in the following documents: • public rulings (including draft public rulings), • ATO interpretative decisions (ID), • decision impact statements (DIS), and • documents listed in the schedule of documents containing precedential ATO views (attached to PS LA 2003/3). We discuss the main types of ATO publications below and also provide a handy summary at the end of this article.
Public rulings Public rulings contain binding advice expressing the ATO’s interpretation of the law. Different types of public rulings are published, including:
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TR — Taxation ruling, TD — Taxation determination (short form ruling), GSTR — Goods and services tax ruling, MT — Miscellaneous taxation ruling, SGR — Superannuation guarantee ruling, CR — Class ruling, and PR — Product ruling. Where a taxpayer follows a public, private or oral ruling that applies to them, the ATO is bound to assess them as set out in the ruling. If the correct application of the law is less favourable to a taxpayer than the ruling provides, the ruling protects the taxpayer from the law being applied by the ATO in that less favourable way. A public ruling usually applies to both past and future years and protects a taxpayer from the date of its application, which is usually the date of effect of the relevant legislative provision. In addition, a public ruling that is withdrawn continues to apply to schemes that had begun to be carried out before the withdrawal. TR 2006/10 is an ATO public ruling that provides details on the protection offered by public rulings, et cetera. The ‘advice under development program’ tracks the development of rulings, determinations and significant addenda, including topics that have been added or withdrawn, and rulings and determinations that have been finalised.
Administratively binding advice The ATO provides administratively binding advice to assist taxpayers in certain limited circumstances. The regulator considers it is administratively bound by its advice and an early engagement (for advice) request can lodged with the ATO to discuss the matter before applying for such advice. Generally, the ATO stands by its advice and will not depart from it unless: • there have been legislative changes since the advice was given, • a tribunal or court decision has affected the ATO’s interpretation of the law since the advice was given, or
