Key point: The scope of the general tax rulings system
is being broadened to include GST. While taxpayers will now be able
to directly challenge public and private rulings, the scope of
public rulings taxpayers can rely on will be reduced.
1 July 2010 marked the start of a legislative scheme for GST
rulings. This represents a significant difference in the way in
which GST rulings are issued and may be relied on by taxpayers. The
changes impact not only new rulings sought from 1 July 2010 but
public and private rulings issued under the previous system.
Recommendations from the Board of Taxation
Following on from the recommendations of the Board of Taxation
review into the administration of the GST law, the Federal
Government has announced a range of proposed amendments to the
current tax laws to simplify the administration of the GST.
This has included amendments to harmonise the indirect tax
rulings system with the general rulings system, contained in the
Taxation Laws Amendment (2010 GST Administration Measures No. 2 )
Act, which only received Royal Assent on 28 June 2010 but takes
effect from 1 July 2010.
The first 10 years
For the first decade of the GST, there was no express power
given to the Commissioner for the issuance of indirect tax rulings
and taxpayers had no formal objection or review
rights in relation to either public or private rulings
that were issued.
However, the Commissioner was able to use his power of general
administration of indirect tax laws to justify the issuance of both
public and private rulings regarding the operation of the GST
The absence of direct appeal rights has not prevented
judicial review of the Commissioner's rulings.
Taxpayers aggrieved by a GST ruling could test the
Commissioner's interpretation of the GST law by objecting to an
assessment that had been made in accordance with the
Commissioner's views or could commence declaratory
However, these indirect methods of challenge had procedural
shortcomings and additional costs. It is intended that the direct
challenge afforded by the new regime will simplify the process of
directly challenging the Commissioner's interpretation of the
The new regime
As we enter the second decade of GST administration, the ruling
system will be aligned with the income tax regime - in the name of
administrative simplicity. This will be achieved by broadening the
scope of the general rulings system to include GST as well as
luxury car tax, wine equalisation tax and excise duty.
One of the unique features of the GST ruling system was the
breadth of publications that were capable of being relied on by
taxpayers as public rulings. This extended not only to GST
Bulletins and GST Determinations but also to booklets, fact sheets
and statements on issues registers.
The new amendments greatly restrict the types of
documents that can be relied on as public rulings. In
future, a document must state that it is intended to be a public
ruling in order for it to operate as such. As a transitional
measure, most material classified as "public rulings"
under the existing regime will be gazetted as "public
rulings" under the new regime, allowing taxpayers to continue
to rely on that material - at least for the time being.
How will the new law apply to existing private rulings?
The new arrangements will apply to private indirect tax rulings
that have been applied for, or are in operation, immediately before
1 July 2010. Taxpayers will be able to continue to rely on those
private rulings, but will be able to object against such rulings in
a manner previously only available for income tax and FBT
Reliance on private rulings by other parties to the
One further recommendation that was made by the Board of
Taxation (and supported by the Federal Government) was to enable
both parties to a transaction to rely on a ruling issued to either
one of those parties - thus eliminating duplication and the risk
that the parties will receive conflicting rulings. The Board of
Taxation's proposal also would have given one party the ability
to object to a ruling issued by the Commissioner to the other party
to that transaction.
This proposal has not found its way into the amending Act.
Therefore, it remains the case that only the entity in
receipt of the ruling from the Commissioner is entitled to rely on
that ruling. In transactions where multiple parties need
to rely on a ruling, a joint application (naming all the
applicants) would need to be submitted to the Commissioner. This is
a common approach which seems to be supported by the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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