About the public and multinational business advice and guidance program
The public and multinational business advice and guidance program (the Program) is a specialised service that:
- delivers high quality advice for complex transactions undertaken by public and multinational business taxpayers on a range of transactions, including mergers and acquisitions, restructures, financing arrangements, or cross-border dealings
- provides certainty about the tax outcomes for transactions where a ruling, advice, or other guidance is provided to help taxpayers comply with their tax obligations from the outset, and
- engages closely with internal and external partners to identify issues early through the early engagement process, facilitating timely and collaborative resolution of tax issues to assist in minimising future compliance costs.
Advice and Guidance products provided as a part of the Program are outlined in Practice Statement Law Administration PS LA 2008/3 Provision of advice and guidance by the ATO.
We strongly encourage taxpayers contemplating complex transactions to seek early engagement with us before lodging a formal ruling application or implementing the transaction. Early engagement on complex transactions that starts as early as possible in the scheme implementation process ensures there is a clear understanding of the proposed scheme and the tax implications before a formal ruling application is made.
The early engagement approach enables taxpayers to engage with us to:
- discuss an arrangement and its intended outcomes
- identify key issues and concerns and how they can be addressed
- discuss the most appropriate form of advice required and the information needed to support it, and
- expedite the ruling process by resolving issues upfront and reducing the need for further queries.
While taxpayers may decide through the early engagement process that a formal ruling isn't required, any advice they receive through the early engagement process isn't binding and doesn't provide the same level of protection as a private or class ruling. In those cases, early engagement still assists taxpayers to understand the Commissioner’s view of the transaction.
About this report
This report includes insights drawn from the work completed in the Program over the 2020-21 to 2023-24 financial years. This report outlines:
- insights on the requests for advice that we receive
- observations about the time it takes us to provide our service offerings and the key factors that impact our timeliness, and
- our key findings about the outcomes of our engagements.
The insights from this report are used by us as part of our commitment to continuous improvement of the Program. We also use the findings and observations to inform how we can better educate and assist taxpayers to obtain tax certainty through the most effective and efficient use of both the Program and the ATO’s public advice and guidance.
Key insights
As a demand driven program, the volume and nature of advice requests we receive reflects market activity as well as legislative changes. Key examples are the effects of macro-economic trends, such as interest rates being higher for longer than markets anticipated on merger and acquisition activity, and the cyclical nature of withholding tax exemption requests to the Program.
Most applications to the Program are made via advisers – this reflects the transactional nature of many of the arrangements on which advice is requested. The number of requests lodged directly by clients is trending down.
Engagement through the early engagement program on complex transactions has continued to trend down, coinciding with decreased requests on capital management transactions and from Top 100 ADF clients. However, our findings show the early engagement program is more likely to result in positive ruling outcomes for applicants.
Receiving a low assurance rating as a part of the ATO’s Justified Trust program doesn't affect the likelihood of receiving a favourable ruling as a part of the Program and doesn't prevent clients from obtaining certainty over their transactions. In addition to their Justified Trust reviews, clients interact with the Program as part of their good governance practices, especially for new transactions and where they are uncertain about the application of the law.
The complex and often precedential nature of our work, with broader system-wide impacts, has seen certain engagements run for extended periods. We continue to work on internal initiatives to reduce cycle times, however, our findings indicate that those requests with longer response times to our requests for further information have taken us the longest to complete.
We didn't receive any new eligible New Investment Engagement Service (NIES) engagements in 2023–24 and have withdrawn the NIES as a service offering.
Program observations
This report provides aggregated data on the 2020–21 to 2023–24 financial years for cases completed within the Program. It doesn't include requests received in this period that were not completed before 30 June 2024.
Requests for advice or engagements are not one-size-fits-all. While this report aggregates data to give an overall picture of the Program, the different complexity of each item produced means that it is inherently difficult for the data to capture the differences between the engagements. Some transactions may require more than one ruling to be issued, particularly when there are multiple parties to transactions each requiring individual certainty, or there are separate issues that need to be addressed independently. The findings in this report are primarily based upon the number of ruling and guidance products completed each year, rather than the number of underlying transactions or schemes to which those products relate.
Additionally, the report findings should be considered alongside broader macro-economic conditions and external influences across the different years included in the report, such as legislative changes and the impacts of COVID-19 in the earlier comparable periods. Changes in demand drivers for advice and guidance impact the type, nature and complexity of advice and guidance requested by our clients.
Receipts
Overall receipts
|
Financial year |
Received |
Completed |
|---|---|---|
|
2020-21 |
580 |
656 |
|
2021-22 |
636 |
571 |
|
2022-23 |
447 |
511 |
|
2023-24 |
437 |
453 |
Not all early engagement, ruling or guidance requests received in a financial year will be completed in that financial year. As such, there is a fluctuating variance between receipts and completions year to year which will be evident in several of the tables in this report.
The number of engagements initiated in 2023–24 is relatively consistent with the preceding year. This stabilisation comes after declines from record high receipts in 2021–22, then driven primarily by increased requests relating to capital management issues during COVID and some remaining requests from sovereign entities and superannuation funds for foreign residents seeking confirmation of their eligibility for tax concessions following legislative changes in 2019.
Completions have also trended down from record highs, following lower receipts, and have again exceeded receipts in 2023–24 as the Program continues to reduce its year-end matters on hand.
Chart 2: Private ruling, class ruling, guidance and early engagement requests received and completed by product type 1 July 2020 to 30 June 2024
You can also view data for requests received and completed by product type in table format.
Private ruling requests received in 2023–24 increased noticeably from the prior year, while there is a noticeable downward trend in requests for early engagements and guidance matters. Drivers for these trends are considered further in the following sections.
The fall in requests for guidance was primarily driven by a decrease in competent authority determination requests being referred internally to the Program for assistance. This reflects a general reduction in these types of requests referred to the Program. Fluctuations in competent authority determination requests will continue to be monitored by the responsible team.
Receipts by topic
Chart 3: Top 10 topics requests received 2023–24
You can also view top 10 topic requests received in table format.
As predicted heading into 2023–24, the Program saw an increase in withholding tax exemption requests relating to sovereign immunity and superannuation funds for foreign residents. This is now the most frequently requested advice topic and was a key driver in the increase in private ruling requests received in the year.
The next most popular advice topics were:
- CGT
- rulings relating to demergers
- CGT rollovers
- Division 855
- CGT cost base
- Division 149
- Division 615
- capital losses
- earnouts and other similar issues
- capital management
- rulings relating to returns of capital
- off-market share buy-backs
- capital raising transactions
- payment of special dividends
- issuance of capital notes and other similar issues
- employee share schemes.
Chart 4: Private ruling, class ruling, guidance and early engagement requests received by Top 5 Topics 1 July 2020 to 30 June 2024
You can also view data on the Top 5 topic requests received in table format.
The increase in withholding tax exemption matters in 2023–24 is clearly viewed in chart 4 which tracks the most popular Program topics across the past 4 years. Also identifiable from this chart is the continued decline in requests relating to capital management issues and international topics which coincide with the downward trend in early engagements.
In line with this decline, we have noted that clients and advisors appear more comfortable foregoing the early engagement process and submitting private ruling applications directly on some topics such as the issuance of capital notes and other capital raisings. Changes to legislation have also affected requests for certain topics.
In the case of off-market share buy-backs (OMSBBs), new legislation introducing an integrity measure to align the tax treatment of OMSBBs undertaken by listed public companies with the tax treatment of on-market share buy-backs has resulted in reduced OMSBBs for listed companies and far fewer requests for advice.
Receipts by taxpayer population
The Action Differentiation Framework (ADF) represents a strategic methodology for engaging with public entities and multinational corporations based upon clients being allocated to populations based upon their place in the framework.
Our ADF population categorisation has recently been updated. This report uses the existing classifications for the 2020–21 to 2023–24 income years:
- Top 100
- Top 1000
- Medium
- Emerging.
The Program also receives requests from clients outside of these ADF populations.
Chart 5: Private ruling, class ruling, guidance and early engagement requests received by taxpayer population 1 July 2020 to 30 June 2024
You can also view requests received by taxpayer population in table format.
When analysed by client placement in the ADF, it is noticeable that there has been a continued downward trend in receipts from the Top 100 population since the COVID peak. This has coincided with the previously discussed decline in receipts regarding capital management transactions, as well as the ongoing maturity of the ATO’s Justified Trust program, especially for Top 100 taxpayers.
Matters received from the Top 1000, Medium and Emerging markets have been relatively consistent from 2022–23 while the increase in matters coming from outside of the ADF framework reflect the previously discussed increase in withholding tax exemption requests from foreign clients.
Chart 6: Private ruling, class ruling, guidance and early engagement requests received by most recent income tax assurance review rating 1 July 2020 to 30 June 2024
You can also view requests received by most recent income tax assurance review rating in table format.
Chart 6 analyses engagement requests received by the Program based on a client's most recent assurance rating under our Justified Trust program, if any. Assurance ratings in the chart are based on the most recent assurance result achieved in a Justified Trust review, such as a Tax Assurance Review, Streamlined Assurance Review or Combined Assurance Review. A client's most recent Justified Trust review may not have taken place in the same year their request was received.
Many of the Program's clients fall outside the scope of the Justified Trust model, which highlights the important service offering the Program provides for taxpayers not engaged under our Justified Trust programs.
There has been a consistently downwards trend in requests from clients who have achieved a high or low assurance rating since 2021–22. This mirrors the overall decline in requests to the Program, particularly those related to capital management, which account for 35% of requests lodged by clients who have been through a Justified Trust review.
The small number of requests from clients with a low assurance rating reflects the small number of clients receiving this assurance outcome in their Justified Trust reviews and the declining number of clients receiving low assurance ratings over recent years. The decline in requests from those clients with high assurance ratings may also reflect an evaluation that they have sufficient certainty regarding their tax outcomes based upon the regular and ongoing Justified Trust review processes, particularly those that are also Top 100 clients.
Receipts by use of advisor
Chart 7: Private ruling, class ruling, guidance and early engagement requests received by advisor type 1 July 2020 to 30 June 2024
Advisors play a key role in the Program, with 81% of requests for advice received through an advisor.
Chart 8: Private ruling, class ruling, guidance and early engagement requests received by advisor type 1 July 2020 to 30 June 2024
You can also view requests received by advisor type in table format.
The number of receipts from Big 4 firms in 2023–24 was slightly higher than the prior year, while receipts from other firms and directly from clients were slightly lower.
New Investment Engagement Service
The NIES was introduced on 1 July 2021 as an investor-initiated service. It connects our specialists with businesses planning significant new investments in Australia. It’s available to:
- all foreign businesses that come through the Global Business and Talent Attraction Taskforce (this Austrade taskforce is no longer in operation)
- other Australian and foreign businesses making new investments into Australia in the vicinity of $250 million or more.
We didn't receive any new eligible NIES engagements in 2023–24.
Given the limited uptake on the NIES since its inception and the recent lack of NIES engagements from the market, it has been withdrawn as a service offering by the ATO.
Investors seeking advice on the tax implications of undertaking significant commercial transactions and investments in Australia can continue to use our early engagement and rulings services to obtain certainty about their circumstances.
Case timeframes
Performance against service commitments
The Program is governed by the ATO’s service commitments, which set out the level of service you can expect when dealing with us. As a part of these commitments, the Program agrees to meet the following targets in 80% of private and class ruling cases:
- Respond to enquires within timeframes – we will complete rulings within 28 days of receiving all required information.
- Keep clients informed of status or delays – if we find that a request raises particularly complex matters that will take more than 28 calendar days to resolve after receiving all the necessary information, we will aim to contact the applicant within 14 calendar days to negotiate a due date.
|
Product |
Timely |
Keep me informed |
|---|---|---|
|
Private ruling |
97% |
96% |
|
Class ruling |
97% |
93% |
Note: No service commitments apply to early engagement or guidance requests.
Program completion timeframes
Reporting on our performance against our service commitments doesn't provide the full picture of the time taken to complete a request for advice or guidance in the Program. Our service commitments don't apply to guidance or early engagement products, and don't account for the impact of the complexity of matters. Complex matters often require multiple stakeholder discussions and additional requests for information (which extends the service standard timeframes) as further issues are identified in these engagements.
Chart 10 shows the median time taken to complete requests, both overall and by product type. In order to provide the most comprehensive analysis of the Program’s cycle times, chart 10 and chart 11 combines early engagement requests that weren't withdrawn with the timeframe of their subsequent ruling or guidance products. That is, if a class or private ruling was preceded by an early engagement, its timeframe has been captured from the date the first early engagement request is lodged to the day the final private ruling is issued or the class ruling is published.
Chart 10: Median total days to complete requests by product 1 July 2020 to 30 June 2024
Note: This chart doesn't include early engagement requests that don't progress to a ruling or guidance product. The time taken to complete early engagements that did progress to has been combined with the time taken to complete the subsequent ruling or guidance product to produce a total engagement time.
You can also view data on median total days to complete requests by product in table format.
While the total median time taken to complete a request in the Program fell slightly from 152 days in 2022–23 to 144 days in 2023–24, chart 11 evidences completion times vary by topic, with some request types taking longer to complete than others.
Class rulings consistently take longer to complete than other products as a result of the additional consent, internal review and publication processes that are required for these products. Additionally, we don't publish class rulings until the relevant schemes have been entered into, which means the completion of many class rulings that have been effectively resolved from a technical standpoint is often delayed due to factors outside of the control of the Program.
Chart 11: Private ruling, class ruling and guidance requests completed 2023–24 difference from median completion days by selected topic
Note: This chart only includes topics with 10 or more completions in 2023–24.
You can also view data on the difference from median completion days by topic in table format.
While some of these differences are easy to explain – discretions for example tend to be straight forward requests that can be completed relatively quickly – others are more complicated to tease out. Cycle times may increase for a number of reasons, including delays in coming to a position on complex or precedential issues within the ATO, as well as delays in obtaining all the information required for us to rule. For example, 2023–24 saw the completion of several highly complex withholding tax matters in the Program which involved significant uncertainty and difficulty obtaining information from foreign sources.
We have observed that it takes longer to resolve matters where Part IVA is considered in addition to the substantive provisions in question than engagements where Part IVA isn't identified as an issue.
In order to better understand the drivers of the time taken to complete requests, in 2023–24 the Program trialled tracking the number of requests for information (RFIs) issued and the time taken to receive a full response for each request.
Chart 12 compares the median time taken to obtain a response (in days) from RFIs issued by selected topics. This allows us to see how responses to RFI differ across topics and compare the impact of responsiveness to RFIs upon overall case times.
Chart 12: Private ruling, class ruling, guidance and early engagement requests completed 2023–24 – difference from median RFI response days by selected topic
Note: This chart only includes topics where we have completed more than 10 requests in 2023–24.
Note: Withholding tax requests involve treaty, royalty and entity-related questions.
You can also view data on the difference from the median RFI response days by topic in table format.
While the median number of days spent waiting on RFI responses across all completed requests where at least one RFI was issued in 2023–24 is 44 days, case teams spent a median of 176 days awaiting RFI responses for withholding tax requests, and 118 days awaiting RFI responses for deduction requests. This is a cumulative number; many engagements require more than one RFI to be issued.
This is a new metric that we are analysing in the Program and we acknowledge delayed RFI responses aren't the sole driver of the time taken to complete engagements. We will continue to improve analysis of timeliness and embed it in our internal reporting rhythms to have better visibility over barriers to the progression of our work which will help us identify internal and external opportunities to provide more timely advice and guidance.
We consult with our external stakeholders on issues and topics that are recurrent in our cases and contribute to the development of new and improved public advice and guidance products based upon insights drawn from the Program. For example, we recently consulted on Additional tier-1 capital note issuances, which are a recurrent one-to-one advice product.
Additionally, with the knowledge that fewer requests for information lead to lower cycle times, we have sought to improve the information available to applicants to support the submission of more comprehensive ruling requests. In 2023–24, we released improved bespoke application forms to support clients requesting rulings in relation to sovereign immunity and superannuation fund for foreign residents withholding tax concessions. We will continue to track the impact that these improved forms have on cycle times for these cases in the future.
Outcomes
Overall ruling outcomes
Chart 13: Outcome of private ruling and class ruling requests 1 July 2020 to 30 June 2024
Note: The x-axis for this chart has been truncated to allow smaller categories to be more easily visualised. This chart won't add up to 100% due to rounding.
You can also view data on the outcome of private ruling and class ruling requests in table format.
The percentage of class and private rulings which have favourable outcomes has remained around 80% for the past 4 years, with only 1% to 3% of rulings resulting in an unfavourable outcome in that period.
Most cases where we refuse to rule occur when the applicant doesn't provide the requested information or where a ruling would have limited immediate utility for self-assessment. We're unable to provide a ruling if we haven't been provided with sufficient information. This most commonly occurs in foreign superannuation fund withholding tax exemption cases or where the relevant transaction is too far in the future and not yet in serious contemplation.
Requests for rulings which result in no further action being required have remained stable as a percentage of total ruling requests over the past 4 years. Outcomes described as ‘no further action’ include instances where a ruling wasn't required because we provided written guidance or the request for a ruling was withdrawn.
A request for a ruling may be withdrawn for numerous reasons, but most were withdrawn because circumstances changed resulting in the proposed transaction not proceeding.
Where we provide an unfavourable decision or an application is withdrawn after we identify concerns with the applicant’s interpretation or application of the law, we may continue to monitor the relevant issue, for example as part of the applicant’s Justified Trust review.
Outcomes by taxpayer characteristics
Despite the relative consistency of outcomes over the past 4 years, outcomes are highly differentiated across taxpayer populations.
Chart 14: Class and private ruling outcomes by taxpayer population 1 July 2020 to 30 June 2024
Note: The x-axis for this chart has been truncated to allow smaller categories to be more easily visualised. This chart won't add up to 100% due to rounding.
You can also view outcomes by taxpayer population data in table format.
Class and private ruling requests lodged by medium and emerging clients are significantly less likely to result in a favourable outcome, and significantly more likely to result in either a withdrawn ruling request, an unfavourable ruling, or a situation where we must decline to rule. This differentiation may be explained by the relative difference in use of the early engagement system across taxpayer populations as viewed in chart 15.
Chart 15: Class and private rulings completed following early engagement by taxpayer population – 1 July 2020 to 30 June 2024
You can also view data on class and private rulings completed following early engagement by taxpayer population in table format.
The relationship between lower use of the early engagement system by medium, emerging and taxpayers outside the ADF, and higher levels of withdrawn and unfavourable ruling outcomes demonstrates the value of the early engagement system, discussed further in the following early engagement section.
However, this stratification in outcomes across ADF rating doesn't extend to Justified Trust assurance ratings.
Chart 16: Class and private ruling outcomes by most recent income tax assurance rating – 1 July 2020 to 30 June 2024
Note: Assurance ratings are based on the most recent assurance result from Income Tax Streamlined Assurance Reviews, Combined Assurance Reviews and Tax Assurance Reviews completed between 2018 and 2024.
You can also view data on class and private ruling outcomes by most recent tax assurance rating in table format.
There is no correlation between ruling outcomes for clients across the 3 assurance ratings – a client most recently receiving a high assurance rating through a Justified Trust review is just as likely to receive a favourable ruling as one who had received a medium assurance rating. Those clients that had most recently received a low assurance rating were more likely to receive a favourable outcome from an engagement with the Program.
A client’s most recent assurance rating is an overall assessment based on our assessment of a number of issues that don't necessarily include the tax issue that is the topic of the ruling request.
A low assurance rating is a starting point for further collaboration between clients and the ATO and doesn't prevent clients from taking advantage of the service offerings of the Program to obtain certainty over their transactions as a part of their good governance practices, particularly in relation to issues and topics that are new or occur outside the scope of their Justified Trust reviews.
Ruling outcomes following early engagement
Chart 17: Outcome of early engagement requests 1 July 2020 to 30 June 2024
Note: This chart won't add up to 100% due to rounding.
You can also view outcomes of early engagement requests data in table format.
The proportion of early engagements progressing to rulings has remained relatively steady over the past 4 years, although 2023–24 saw a slight increase in the proportion of early engagement requests that were closed without further action. While this is sometimes a result of the case teams providing an unfavourable indicative view, this most commonly occurs when circumstances changed and the transaction didn't proceed, or when the initial analysis advised that a ruling wasn't required.
We encourage taxpayers to engage with us early and seek advice for complex transactions as the early engagement system has a notable effect on the outcomes of class and private rulings.
Charts 18 and 19: Class and private ruling request outcomes with and without early engagement 2023–24
Chart 18: Request outcomes without early engagement
Chart 19: Request outcomes with early engagement
In 2023–24, class or private ruling requests that followed an early engagement were 19 percentage points more likely to result in a favourable ruling (where we agree with the applicant’s view of the law) than ruling requests that hadn't been preceded by early engagement.
The early engagement process doesn’t just increase the likelihood of receiving a favourable ruling, and decrease the likelihood of receiving an unfavourable ruling, it also significantly decreases the number of withdrawn rulings and circumstances where we decline to rule.
For class and private ruling requests completed in 2023–24, using the early engagement process reduced the number of unfavourable rulings from 4% to 1% and reduced the number of withdrawn rulings from 17% to 3%. We didn't decline to rule on any class or private ruling requests that came to us following an early engagement.