Private Ruling

Along with private rulings, the ATO offers a number of different taxpayer advice products and other services which provide insight into the ATO’s interpretation of taxation laws and how the ATO intend to administer the law. Products include:

• Interpretative Decisions (ID). Interpretative Decisions are a summarised version of the ATO’s view on the application of law to a particular situation. It sets out the ATO’s precedential views about certain interpretative issues and provides internal direction to ATO personnel to ensure a consistent approach to resolving interpretative. Interpretative Decisions are internal documents and therefore not a recognised form of advice. Refer to PS LA 2001/8 which further explains the purpose and workings of Interpretative Decisions.
• Law Administration Practice Statements (PS LA). Law Administration Practice Statements are statements produced (principally) to provide internal direction to ATO personnel in performing duties involving the application of laws administered by the ATO. Law Administration Practice Statements are not a recognised form of advice and are not primarily intended to provide interpretative guidance. Refer to PS LA 1998/1 which further explains the purpose and workings of Law Administration Practice Statements.
• Taxpayer Alerts (TA). Taxpayer Alerts are statements issued to warn the taxpayer community and advisers of arrangements that the ATO is concerned are at ‘high risk’ of contravening tax law (e.g. arrangements which may be in breach of the specific or general anti-avoidance provisions; arrangements that constitute a sham or that are legally ineffective; arrangements involving the exploitation or deliberate misapplication of law; arrangements which involve the application of promoter penalty laws; arrangements where the purported tax result of an arrangement is not reasonably arguable; or arrangements where there may be fraud or evasion involved). Taxpayer Alert’s usually focus on new or emerging arrangements. However, TA’s may also be issued to address recurrences of arrangements that have previously been risk-assessed where there is information available to the ATO that indicates a need to take immediate. Refer to PS LA 2008/15 which further explains the purpose and workings of Taxpayer Alerts.
• GST written advice (various forms including GST rulings referred as ‘GSTR’). These are generally binding on the ATO, with exceptions such as GST Practice Statements and GST Case Decision Summaries.
• Taxation Rulings (TR). Taxation Rulings are a form of public ruling where the ATO expresses views of how a provision of tax law applies, or would apply, to taxpayers in relation to a class of schemes or to a class of taxpayers generally, rather than in respect of the specific circumstances of a particular taxpayer. Refer to PS LA 2008/3 which further explains the purpose and workings of Taxation Rulings (refer to sections which deal with public rulings).
• Taxation Determinations (TD). Taxation Determinations are another form of public ruling where the ATO expresses, in short, views of how a provision of tax law applies, or would apply, to taxpayers in relation to a class of schemes or to a class of taxpayer generally, rather than in respect of the specific circumstances of a particular taxpayer.
• Law Companion Rulings (LCR). Law Companion Rulings are another form of public ruling where the ATO expresses views on how recently enacted law applies to a class of taxpayers, or to taxpayers generally, by providing an insight into the practical implications or detail of recently enacted law in ways that may go beyond mere questions of interpretation. Refer to LCR 2015/1 which further explains the purpose and workings of Law Companion Rulings.
• Product Rulings (PR). Product Rulings are another form of public ruling where the ATO expresses views about the application of relevant provisions of tax law to a scheme where a number of taxpayers individually enter into substantially the same transactions with a common entity or group of entities. Refer to PR 2007/71 which further explains the purpose and workings of Product Rulings.
• Class Rulings (CR). Class Rulings are another form of public ruling. They are issued in response to a request from an entity seeking advice about the application of relevant provisions to several taxpayers (a ‘class of entity’) in relation to a defined scheme (other than an investment or financial product for which a product ruling can be issued). Examples of situations where such a ruling may be given include where an employer seeks advice about the tax consequences of a bona fide redundancy plan for a class of employees, or where an employer is seeking advice about the tax consequences of an employee share acquisition plan for individual employees. Refer to CR 2001/1 which further explains the purpose and workings of Class Rulings.
• Practical Compliance Guidelines (PCG). Practical Compliance Guidelines are designed to provide taxpayers with legal administration guidance that conveys the ATO’s assessment of relative levels of tax compliance risk across a spectrum of behaviours or arrangements. Such guidance may, for example, enable taxpayers to position themselves within a range of behaviours, activities or transaction structures that the ATO describes as low risk and unlikely to require scrutiny – to safely ‘swim between the flags’. This broader guidance can also enable the ATO to communicate how it will sensibly apply its audit resources or provide practical compliance solutions where tax laws are uncertain in their application or are found to be creating unsustainable administrative or compliance burdens in light of, for example, evolving commercial practices. Refer to PCG 2016/1 which further explains the purpose and workings of Practical Compliance Guidelines.
• Decision Impact Statements (DIS). Decision Impact Statements are designed to advise the taxpayer community of the implications (in the ATO’s view) of a particular court or tribunal decision. The statement includes details of the case; a summary of the key facts; issues decided by the court or tribunal; relevant legislation and case law; relevant rulings and determinations. The DIS provides the ATO’s view of the decision and sets out the implications of the decision on the operation of current public rulings, determinations and Law Administration Practice Statements.
• Oral Rulings. Oral Rulings are an oral statement made (generally in response to a taxpayer request) about the way a relevant provision is viewed to apply to a specified scheme.
• Miscellaneous Taxation Rulings (MT). Miscellaneous Tax Rulings are another form of public ruling issued by the ATO in respect of ‘miscellaneous’ topics. Refer to PS LA 2008/3 which further explains the purpose and workings of Miscellaneous Taxation Rulings (refer to the sections which deal with public rulings).
• Capital Gains Tax Determinations (CGTD). Capital Gains Tax Determinations are no longer published but were designed to provide taxpayers with answers to the most common and significant CGT problems identified by the ATO. Refer to TD 1 which further explains the purpose and workings of CGT Determinations.
• Self Managed Superannuation Fund Specific Advice (SMSFSA). Refer to PS LA 2009/5 which further explains the purpose and workings of Self Managed Superannuation Fund Specific Advice.
• Bulletins. Bulletins are issued by the ATO to provide updates on legislative, corporate and administrative tax news to medium, large and multinational businesses and their advisers. Refer to the ATO website for further information.
• Website Publications. Website publications are made by the ATO to provide easy to understand guidance to assist taxpayer’s to manage their tax affairs. This includes guides and instructions relevant to completing tax returns. Refer to the ATO website for further information.
• Tailored Technical Assistance. Tailored Technical Assistance is offered by the ATO in order to provide assistance to taxpayers and advisers if they are: (i) not able to find the ATO’s view of how the law applies to a particular technical issue; (ii) not certain how the ATO’s view of the law applies in the taxpayer’s circumstance; (iii) seeking greater certainty (protection) that published products provide. Refer to the ATO website for further information.
• Early engagement discussions. Early engagement discussions are offered by the ATO for taxpayer’s seeking advice on complex transactions.
• Media releases. Media releases are also made regularly by the ATO to bring relevant news to the attention of the community. Refer to the ATO website for further information.
• Public speeches. Public speeches are also made on occasion by the ATO to bring relevant news to the attention of the community. Refer to the ATO website for further information.
• Open forums. Open forums are also held by the ATO to provide taxpayers and advisers with information on upcoming changes to law and administration and provide time for interaction and question asking. Refer to the ATO website for further information.
• Draft rulings. Draft rulings are tax rulings in unfinalised form. The draft ruling expresses the ATO’s preliminary views on tax matters in the same way as a typical public ruling. Following consultation and amendment, the draft ruling will usually (following any amendments) convert into a finalised ruling.
• Superannuation Guarantee Rulings (SGR).
• Superannuation Contributions Rulings (SCR).
• Superannuation Guarantee Determinations (SGD).

Some of these products bind the ATO. Others do not. Some, if appropriately relied on, will safeguard the taxpayer from liability to shortfall on primary tax and / or administrative penalties and / or interest charges. Refer to TD 2011/19 which provides insight into the imposition of administrative penalties and interest charges.

Some of these products are targeted to a particular entity, whilst others are targeted at the broader public. PS LA 2008/3 provides further information on some of the different products offered by the ATO.

The scope of private rulings

The ATO may issue a private ruling in relation to ‘tax’ matters, but also in relation to liability, administration or collection of any of the following:

• Medicare levy
• Fringe benefits tax
• Franking tax
• Withholding tax
• Mining withholding tax
• Petroleum resource rent tax
• Indirect tax
• Excise duty
• And others referred to in section 357-55 of Sch 1 TAA.

The utility of a private ruling will vary from taxpayer to taxpayer and according to circumstances.

A private ruling may be an opportunity for the taxpayer to obtain understanding on the tax outcomes related to the institution of a particular scheme. The taxpayer is also provided the assurance that the private ruling is binding on the ATO where the taxpayer ‘relies’ on it by acting in accordance with it.

The taxpayer will be protected from additional primary tax, and tax-related administrative penalties and interest where they rely on the private ruling (subject to conditions).

In this way, private rulings can provide helpful safeguards for taxpayers looking to manage their tax risks.

Obviously, there will be less utility in requesting a private ruling where the taxpayer is instituting arrangements where the application of the law is clear-cut. That is, a private ruling is generally more appropriate where there are complex facts and contention over the application of tax laws.

There are many other potential matters for a taxpayer to consider when deciding if to apply for a private ruling. For example:

• The length of time for the private ruling to be issued. There can be lengthy delays between the submission of an application for a private ruling and the issuing of that private ruling (or communication that the ATO has declined to make that private ruling). That may be problematic for a taxpayer that requires urgent guidance to make a pressing commercial decision. The rules setting out the timelines for the issue of a private ruling (and the related extension of time rules) are addressed under the below heading, ‘timeframes and extensions’.
• The time effort and cost complete a private ruling application and follow through with any subsequent processes.
• The possibility of relying on or electing to receive advice through another product or service. Private rulings are not the only product which provide protection for taxpayers. For example, a taxpayer may prefer to simply rely on a taxation ruling which clearly applies to the arrangements in question.
• The critical nature of ensuring a private ruling application is appropriately drafted so as to provide the taxpayer with adequate coverage and protection.
• The possibility that the ATO may decline to make the private ruling. This matter is addressed under the below heading, ‘is the ATO required to make a private ruling?’
• The possibility of changes to tax law that may upset the standing of the private ruling. This mater is addressed under the below heading, ‘the impact of a change in law on the standing of a private ruling’.
• The coverage of a private ruling may be hampered where a taxpayer deviates from arrangements specifically contemplated in the private ruling. Therefore, a taxpayer may benefit from considering the ways a private ruling may constrain in the way they carry out their arrangements (at least if they want the protection offered by a private ruling). This matter is addressed under the below heading, ‘relying on a private ruling and limitations’.
• A private ruling obviously draws ATO attention to the taxpayer’s circumstances. Consequently, the ATO may increase its scrutiny of a taxpayer should the taxpayer receive an adverse private ruling and then proceed to act contrary to the private ruling. Of course, the ATO’s interpretation and application of the law to particular facts (via a private ruling or standard assessment) can (usually) be challenged by objection and litigation through the court system. However, that requires willingness for the taxpayer to formally contest with the ATO, potentially at high costs and over a protracted period.

Per section 357-60 of Sch 1 TAA, the ATO is bound by a ruling it issues (including a private ruling) where:

• the ruling applies to the taxpayer; and
• the taxpayer relies on the ruling by acting or not acting in accordance with the ruling.

The implication from these criteria is that the arrangements of the scheme articulated in the application need to match the actual arrangements of the scheme undertaken. Otherwise, the private ruling may not provide adequate coverage to the taxpayer when they implement the arrangements.

The taxpayer only ‘relies’ on a private ruling where they adhere to it. That requires the taxpayer to follow through with the arrangements of the scheme as described in the private ruling application and private ruling.

If the taxpayer does indeed flow through with the arrangements covered by the private ruling application and private ruling, the taxpayer should ensure that relevant tax return/s lodged agrees with the ATO’s interpretation and application of the law as expressed in the private ruling.

The drafting of the application for a private ruling is critical for the taxpayer hoping to rely on the advice provided in the private ruling. The application must be drafted appropriately and precisely to define key facts, arrangements and relevant provisions of tax law. Deficiencies in drafting may result in the ATO declining to make a private rule, or alternatively, the delivery of private ruling that is valueless to the taxpayer (as it does provide genuine coverage in respect of arrangements should the ATO make an adverse assessment in relation to the arrangements).

Note that a taxpayer may also not be in a position to rely on a private ruling where a time limit imposed by taxation law has passed (section 357-60 of Sch 1 TAA).

The TAA provides two helpful examples demonstrating how the requirements of Sch 1 section 357-60 operate.

Example 1

Cecelia applies for, and obtains, a private ruling that, when she makes a payment in specified circumstances, she would not have to withhold an amount under a relevant provision. Cecelia makes the payment in the circumstances specified in the ruling, so the ruling applies to her. Cecelia relies on the ruling by not withholding an amount from the payment. The Commissioner must not apply the provision in relation to Cecelia in a way that is inconsistent with the ruling (unless Cecelia stops relying on the ruling or the law is more favourable to her: see sections   357 - 65 and 357 – 70 of Sch 1 TAA).

Example 2

Cathie obtains a private ruling that a type of supply she makes is GST - free. She relies on the ruling by: (a) giving her customers invoices that show no GST payable on the supplies; and (b) lodging her GST return on the basis that the supplies are GST - free. The Commissioner must administer the GST law in relation to Cathie on the basis that the supplies to which the ruling relates are GST - free. This does not apply if Cathie stops relying on the ruling, such as by issuing tax invoices that show GST payable on the supplies.

The taxpayer is not necessarily required to rely on the private ruling at the first possible opportunity (section 357 – 60 of Sch 1 TAA).

Note that a taxpayer has discretion to elect to stop relying on a private ruling.

Similarly, a taxpayer can choose not to act in accordance with a private ruling. The obvious risk being exposure for the taxpayer to an adverse assessment without any protections against the imposition of liability to shortfall tax, penalties and interest. These risks are heightened where the tax position taken by the taxpayer is not ‘reasonably arguable’ (section 357-65 of Sch 1 TAA).

As mentioned, the private ruling must be adhered to strictly to provide coverage to the taxpayer. If the arrangement described in the private ruling changes for the taxpayer, the private ruling may no longer apply on the basis that the requirements of section 357-60 of Sch 1 TAA have not be satisfied.

This may somewhat hamstring the taxpayer by deterring them from ‘pivoting’ or taking actions which result in disparities (potentially even slight disparities) between the arrangements of the scheme contemplated in the private ruling and the actual arrangements of the scheme as carried out.

Note, it is possible that a taxpayer could rely on a private ruling for a period of time before circumstances change that prevent the taxpayer from continuing to rely on the private ruling.

The taxpayer may be required to provide evidence to prove that there is no material change between the arrangements of the scheme carried out and the arrangements of the scheme described in the private ruling.

Section 359-5 of Sch 1 TAA provides the source of the right for a taxpayer to request a private ruling. There are broad rights for making such a request.

The application must made in writing and the applicant must use the approved form (section 359-10 of Sch 1 TAA).

The application can be made by either the relevant taxpayer themselves (e.g. an individual for themselves, a partner in a partnership, the trustee of a trust, an officer on behalf of a company etc.), the taxpayer’s agent or the taxpayer’s legal personal representative (section 359-10 of Sch 1 TAA).

The application must include the following (section 359-20 of Sch 1 TAA):

• The identity of the relevant taxpayer.
• That the application is for a private ruling.
• The details of the relevant scheme and arrangements.
• The relevant provisions of law to be considered. Note, the taxpayer may not ask the ATO to consider the application of ‘any other provision of the Act’ in addition to the relevant provision of law which have been set out. The ATO has previously been held to be within its rights to decline to make private rulings where an application has included this request.
• The time from which the private ruling is intended to begin and cease to apply – either by date or by reference to a specific event (section 359-25 of Sch 1 TAA). The specified start time, or end time may be before, when, or after the private ruling is made. If there is no specified start time, the start time will be from the time the private ruling is made (section 359-25 of Sch 1 TAA). If there is no specified end time, the end time will generally be at the end of the single income year or other accounting period in which it started to apply. Consequently, it will often be necessary for the applicant to provide a specified start time and end time to ensure coverage for the duration of the relevant scheme.

The scope of a private ruling application – a ‘scheme’

The private ruling sought by a taxpayer must relate to a particular ‘scheme’. A ‘scheme’ is defined broadly in section 995-1 of the Income Tax Assessment Act 1997 as:

‘Any arrangement’. This is further defined as ‘any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable or intended to be enforceable by legal proceedings.’

‘Any scheme, plan, proposal, action, course or action or course of conduct, whether unilateral or otherwise.’

Withdrawing a private ruling application

The application for the private ruling may be withdrawn by the applicant prior to the private ruling issuing (section 359-10 of Sch 1 TAA).

The ATO may request further information

If the ATO considers that further information is required to make a private ruling, the ATO must request the applicant provide that information (section 357-105 of Sch 1 TAA).

The request for further information will extend the date by which the ATO is required to make the private ruling.

The ATO may decline to make the private ruling if the applicant does not give the information to the ATO within a reasonable time (section 357-105 of Sch 1 TAA).

Note, the ATO can take into account that additional information or any other information, including from third parties. The applicant will usually be provided with an opportunity of response to information which has not been collected directly from applicant, but which the ATO proposes to consider.

Per section 359-35 of Sch 1 TAA, the basic position is that the ATO is required to make a private ruling in response to a compliant application. However, the ATO’s obligation to do so may be avoided and the request for a private ruling declined, where:

• The ATO considers that making the ruling would prejudice or unduly restrict the administration of a taxation law; or
• The matter sought to be ruled on is already being, or has been, considered by the ATO for the taxpayer; or
• The matter sought to be ruled on is how the ATO would exercise a power under a relevant provision (in section 359-35(3) Sch 1 TAA there is the example of Michael who applies for a private ruling on the way in which the ATO might exercise discretion under section 255-10 which is related to deferring the payment time. Rather than make the ruling, the ATO decides to defer the time at which an amount would otherwise by payable by Michael); or
• The ATO has requested the applicant give further information under section 357-105 of Sch 1 TAA and the applicant has not given it to the ATO within a reasonable time; or
• The ATO considers that the correctness of a private ruling would depend on which assumptions were made about a future event or other matter. Although note that in this situation the ATO could alternatively decide to make the private ruling by making such assumptions it considers to be most appropriate. The ATO are required to advise the applicant of the assumptions proposed to be made and to provide the applicant a reasonable opportunity to respond; or
• The taxpayer fails to meet the private ruling application conditions (listed above). For example, not lodging the application via an approved form, not identifying the relevant taxpayer, not identifying the relevant scheme or provisions of law, etc.

If the ATO declines to make the private ruling, they must give the applicant written reasons for doing so (section 359-35 of Sch 1 TAA).

If a private ruling application has been made and within 60 days the ATO has neither made the private ruling nor told the applicant the ATO has declined to make the private ruling, then the applicant may give the ATO written notice requiring the ATO to make the private ruling (section 359-50 of Sch 1 TAA).

The 60 day period can be extended where during that 60 day period:

• The ATO requests further information (per section 357-105 of Sch 1 TAA). The extension is for the number of days between the information being requested and received.
• The ATO advises the applicant about the assumptions proposed to be made under section 357-110 of the TAA. The extension is for the number of days between the date the applicant is told and the date the applicant provides a response related to the assumptions.
• The ATO tells the applicant about information provided by a third party that the ATO proposes to take into account under section 357-120 of Sch 1 TAA. The extension is for the number of days between the date the ATO tells the applicant and the day on which the ATO receives the applicant’s response.
• The ATO refers a valuation to a valuer under section 359-40 of Sch 1 TAA. The extension is for the number of days between the ATO telling the applicant about the referral and the day on which the ATO tells the applicant that the valuer has completed its work in relation to the valuation.

Once the 60 day period has elapsed and the taxpayer has provided the ATO with notice to make a private ruling, the ATO has 30 days to make the private ruling (or decline to make the ruling).

If the private ruling is not made (or declined) within 30 days, the applicant obtains rights to lodge an objection against the ATO’s failure to make the ruling within required timelines.

The ATO may elect to prioritise an application for a private ruling that deals with a time sensitive issues or where the transaction is commercially significant or involves complex law or facts where foreknowledge of tax outcomes are imperative.

If dissatisfied with the result of a private ruling, the applicant may lodge an objection in the manner set out in Part IVC of the TAA.

• Per s 14ZW(1A) of the TAA, the objection must be lodged by the latest of the following dates:
• 60 days after the private ruling is provided to the applicant.
• 2 or 4 years (depending on the circumstances) from the final day of lodgement of an income tax return for an income year which the private ruling concerns.
• By the date of extension – if the ATO grants an extension. The ATO’s decision not to grant the extension may itself be reviewable decision.

However, an objection is not available to a taxpayer if, per section 359-60 of Sch 1 TAA:

• The taxpayer has received an assessment for an income year contemplated under the private ruling; or
• The private ruling relates to withholding tax that has become due and payable.

In these circumstances, the taxpayer’s pathway to dispute with the ATO would be forged by objecting to the tax assessment (not the private ruling) (section 359-60 of Sch 1 TAA). Note that a taxpayer is not permitted to object to the parts of an assessment which has been the subject of an objection to a private ruling (section 14ZVA of Sch 1 TAA).

If the objection is disallowed by the ATO, the taxpayer generally obtains the right to appeal the decision to the Administrative Appeals Tribunal or the Federal Court (depending on the circumstances).

There are also a number of circumstances where the Administrative Appeals Tribunal and / courts will be limited in manner and jurisdiction to review objection decisions. These circumstances are not further addressed in this article.

When considering if to allow the objection to a private ruling (in whole or in part), the ATO is permitted to consider any additional information available but needs to provide the taxpayer with a reasonable opportunity to respond to that information (section 359-65 of Sch 1 TAA).

If the objection is successful, the private ruling has effect as altered by the objection decision provided the period in which an appeal is against (or an application for the review of) the decision may be made has ended without such an appeal or application being made (section 359-70 of Sch 1 TAA).

Revised private rulings

The ATO may make a revised private ruling if (per section 395-55 of Sch 1 TAA):

• The ATO has previously made a private ruling that applied to the taxpayer; and
• When the ATO made the revised private ruling, the scheme to which the earlier ruling relates has not begun to be carried out; and
• The earlier ruling relates to an income year or other accounting period and that year or period has not begun.

When the revised private ruling is made, the earlier ruling in its initial form stops applying to the taxpayer.

The ATO has discretion about when to issue a revised private ruling.

The ATO must provide the applicant with a copy of the revised private ruling.

Note that a scheme will be considered ‘begun to be carried out’ if a contract requiring a scheme has been entered into (section 357-80 of Sch 1 TAA).

Valuations

As set out in section 359-40 of Sch 1 TAA, if making a private ruling requires the value of something to be determined, the ATO may:

• Refer the valuation to a valuer (generally a registered or approved valuer); or
• Refer a valuation provided by the applicant valuer (generally a registered or approved valuer) for review.

If the ATO refers the valuation to a valuer, the ATO must tell the applicant that this has been done and provide an estimated cost to obtain the valuation which the ATO may charge to the applicant. Generally, the engagement cost will need to be paid up front before the valuation work commences. To the extent the final valuation fee is different from the estimate, the variance will be either charged or reimbursed to the taxpayer. The ATO must advise the applicant once the valuer has completed the valuation work.

Impact of private rulings on a taxpayer’s obligations

The fact that a taxpayer applies for a private ruling (or makes an objection to a private ruling) does not affect that taxpayer’s obligation to lodge a return or do anything else, or the ATO’s power to make or amend an assessment or do anything else (section 357-125 of Sch 1 TAA).

The ATO can technically assess a taxpayer in a way which is contrary to the position it takes in a private ruling. It would then fall on the taxpayer to argue that the ATO was bound by the private ruling through an objection / appeal process.

Related rulings

The ATO may make a related ruling in addition to a ‘first ruling’ setting out how another relevant provision (for example, withholding tax or fringe benefits tax) applies or would apply to the taxpayer (section 359-45 of Sch 1 TAA). The ATO may: (a) make the first ruling a ruling on the way in which another relevant provision applies or would apply to the taxpayer; or (b) make an additional private ruling on the way in which: (i) another relevant provision applies or would apply; or (ii) a relevant provision applies or would apply to the taxpayer in relation to a scheme related to the scheme to which the first ruling applies.

Inconsistent rulings

The rules related to inconsistent rulings are set out in section 357-75 of Sch 1 TAA.

If an earlier private ruling is inconsistent with a later private ruling, the earlier private ruling is generally taken not to have been made.

If an earlier public ruling is inconsistent with a private ruling, the taxpayer may rely on either ruling.

If an earlier private ruling is inconsistent with a public ruling, then the earlier ruling is taken not to have been made if, when the later ruling made: (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. Otherwise, the taxpayer may rely on either ruling.

The impact of a change in law on the standing of a private ruling

If a private ruling has been issued, the private ruling may cease to apply if the underlying provision of law become materially different (section 357-85 of Sch 1 TAA). However, the private ruling’s application will not cease if the new provision in question is not materially changed and continues to express the same ideas as the old provision.

Publication of private rulings

A private ruling made by the ATO will be published publicly, but with the taxpayer’s identity and certain other particulars removed to maintain taxpayer confidentiality. Refer to PS LA 2008/4 for further information on the publication and editing of private rulings.

The precedential value of a private ruling

A private ruling is not binding on the ATO for taxpayer’s other than those identified in the private ruling.

The private ruling offers no real precedential value or point of argument for an external taxpayer.

However, it may occasionally be worthwhile exercise to review private rulings to perhaps get a sense of the ATO’s practical stance to certain contentious areas of tax law.

Private advice can be located in the ATO legal database which is publicly available on the ATO website.

Private rulings and the anti-avoidance rules

A taxpayer can ask the ATO to consider the application of Part IVA in a private ruling. The taxpayer can also request the matter be referred to a General Anti-Avoidance Rules (GAAR) panel. The GAAR panel provide specialist advice on the application of the general anti-avoidance rules to the taxpayer’s circumstances. That advice will be considered closely by ATO decision makers when making a private ruling.

Further information on private rulings

Taxation Ruling 2006/11 provides further information on the purpose and workings of private rulings.

That ruling addresses many of the concepts presented in this article.