The update introduces provisions enabling private rulings on Pillar Two interpretative issues and a new “decline to rule” mechanism, reflected in the addition of sections 40A and 40B.
The Australian Taxation Office (ATO) has released an updated version of Taxation Ruling (TR) 2006/11 on Private Rulings. A key change involves the inclusion of provisions allowing taxpayers to seek private rulings on interpretative matters related to Pillar 2, as well as the introduction of a new “decline to rule” mechanism specific to Pillar 2.
The update adds two new sections—40A and 40B—to the ruling.
What this Ruling is about
This Ruling 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 (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.
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, which recommended harmonising the indirect tax rulings system with the general rulings system.
This Ruling considers:
- What constitutes a private ruling;
- What is a relevant provision;
- What can be covered by a private ruling;
- The status and binding effect of private rulings;
- Who may apply for a private ruling and who is covered by it;
- The form of application and information to be provided;
- The making of a private ruling;
- Applications that do not have to be dealt with;
- The effect of inconsistent rulings;
- Revising private rulings;
- The status of private rulings following a rewrite of the law;
- The period for which a private ruling has effect;
- Delays in making private rulings; and
- The review of private rulings.
4o. The Commissioner may also decline to rule where:
- they have asked you for additional information and it is not provided within a reasonable time (see paragraph 33 of this Ruling); or
- they consider that the correctness of the private ruling would depend on which assumptions were made about a future event or other matter.
40A. The Commissioner may decline to rule where they consider 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.
Date of effect
This Ruling applies from 1 January 2006. However, this Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of this Ruling.
