Advice that is legally binding on us
We provide you with advice on how the laws we administer apply to you. We generally provide this advice in the form of a ruling. This advice provides you with the highest level of protection if you rely on it.
Our advice includes parts which are legally binding on us, and parts which are not. We clearly identify which parts of our advice are binding and non-binding.
Where you rely on the binding parts, the law protects you from having to pay a tax shortfall if the advice turns out to be incorrect and you then make a mistake. In addition, because we will apply the law as set out in the ruling, the false and misleading penalty and interest on the tax shortfall will not apply.
Where you rely on the non-binding parts, we will apply those parts to you as if we were administratively bound by them, unless we have good and substantial reasons not to. For example, if you rely on a ruling knowing that it is not appropriate for your circumstances.
Advice that we consider ourselves bound by
Some of the laws we administer do not enable us to provide legally binding advice. However, to properly administer the law, we provide advice that we consider ourselves to be bound by, except in limited circumstances.
These exceptions include where:
- there have been legislative changes since we issued our advice
- a tribunal or court decision has affected our interpretation of the law since we issued our advice
- for other reasons, the advice is inappropriate (for example, if commercial practices have changed, if we think the ruling was applied inappropriately or where, upon reconsideration, we consider the advice to be wrong according to the law).
We generally produce this advice in the form of either administratively binding (rather than legally binding) rulings or other advice.
Where you rely on administratively binding advice and it turns out to be incorrect, you will not have to pay a tax shortfall. In addition, the false and misleading penalty or interest on the tax shortfall will not apply if you rely on the advice reasonably and in good faith.
Relying on our advice and guidance
We provide a range of guidance to help you understand your rights and obligations under the laws we administer. We are committed to providing you with accurate and clear advice and guidance.
However, if you follow any of our advice or guidance and it turns out to be incorrect, or you make a mistake because it was misleading, we will take this into account when determining what, if any, action we should take.
The level of additional protection you receive, and what happens, depends on:
- the type of advice or guidance you relied on
- the law it covers
- the reason for the mistake.
As a general rule, if we require you to pay a tax shortfall, the false and misleading statement penalty will not apply. Also, if you rely on the guidance reasonably and in good faith, any interest on the tax shortfall will not apply. Where the guidance gives you a different level of protection, it will tell you what that protection is and when it applies.
Find out more about our commitment to you.
Level of protection by product
The levels of protection provided by our various products are explained in the following tables.
Product |
Protection from tax shortfall |
Protection from interest on the shortfall* |
Protection from false or misleading statement penalty |
|---|---|---|---|
|
These include:
|
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
|
Yes |
Yes |
Yes |
Product |
Protection from tax shortfall |
Protection from interest on the shortfall* |
Protection from false or misleading statement penalty |
|---|---|---|---|
Income tax series (IT series) These are rulings published before 1 July 1992. |
Yes |
Yes |
Yes |
Capital gains tax (Determination series) These are rulings published before 1 July 1992. |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
Product |
Protection from tax shortfall |
Protection from interest on the shortfall* |
Protection from false or misleading statement penalty |
|---|---|---|---|
No |
Yes |
Yes |
|
No |
Yes |
Yes |
|
No |
Yes |
Yes |
|
No |
Yes |
Yes |
|
No |
Yes |
Yes |
|
Website material or publication Content on our website and in our downloadable or paper publications provide general assistance. This information is often simply expressed and may provide step-by-step guidance. |
No |
Yes |
Yes |
No |
Yes |
Yes |
|
No |
Yes |
Yes |
|
No |
Yes |
Yes |
|
Tools and calculators These are available on our website to help work out an amount or status when self-assessing a liability or entitlement. |
No |
Yes |
Yes |
Product |
Protection from tax shortfall |
Protection from interest on the shortfall* |
Protection from false or misleading statement penalty |
|---|---|---|---|
Edited version of a private ruling |
No |
No |
No |
No |
Yes |
Yes |
|
Discussion paper |
No |
No |
No |
Product |
Protection from tax shortfall or interest, and false or misleading statement penalty |
|---|---|
Superannuation Guarantee Ruling and Superannuation Contributions Ruling |
Some protection against penalties may be offered |
Superannuation specific advice This is written advice relating to certain obligations required by the Superannuation Industry (Supervision) Act 1993 (SISA) for identified self-managed super funds. |
Tax, penalties and interest cannot be raised under the SISA, but some protection may be offered (see PS LA 2009/5) |
* Where our product protects you from interest on the tax shortfall, you must have acted reasonably and in good faith in order to be protected. The protection from interest does not extend to the general interest charge for late payment of the tax shortfall. For super guarantee charge matters, the protection does not extend to the nominal interest component of a super guarantee shortfall. Where you do not have to pay a tax shortfall, interest on the tax shortfall will not arise.
Additional information
For additional information see:
- TR 2006/10 Public Rulings
- LCR 2015/1 Law Companion Rulings: purpose, nature and role in ATO's public advice and guidance
- PCG 2016/1 Practical Compliance Guidelines: purpose, nature and role in ATO's public advice and guidance
- CR 2001/1 Class Rulings system
- PR 2007/71 The Product Rulings system
- TR 2006/11 Private Rulings
- PS LA 2001/8 ATO Interpretative Decisions
- PS LA 1998/1 Law Administration Practice Statements
- PS LA 2008/3 Provision of advice and guidance by the ATO
- PS LA 2008/4 Publication of edited versions of written binding advice
- PS LA 2009/5 Provision of advice and guidance by the Australian Taxation Office (ATO) in relation to the application of the Superannuation Industry (Supervision) Act 1993 and the Superannuation Industry (Supervision) Regulations 1994 to Self-Managed Superannuation Funds
- PS LA 2009/9 Conduct of ATO litigation and engagement of ATO Dispute Resolution
Tax shortfall, interest and penalties
Tax shortfall
A tax shortfall amount arises where a liability is less (or a credit, grant or benefit is more) than it would otherwise have been according to law.
Interest is charged on a tax shortfall in the form of either a:
- shortfall interest charge (SIC)
- general interest charge (GIC).
Find out about Remission of interest charges.
False or misleading statement penalty
An administrative penalty for making false or misleading statements applies whether or not a tax shortfall arises as a result of the statement.
Even where this penalty applies, the law gives us discretion to remit the penalty (partially or in full) depending on individual circumstances.
For more information see:
- Statements and positions that are not reasonably arguable
- PS LA 2012/4 Administration of penalties for making false or misleading statements that do not result in shortfall amounts
- PS LA 2012/5 Administration of penalties for making false or misleading statements that result in shortfall amounts.