Practice Statement Law Administration

PS LA 1998/1

Law administration practice statements

• This document has changed over time. View its history.

This Practice Statement explains the system of law administration practice statements.

1. Why do we have law administration practice statements?

The ATO Policy Framework (the Framework)^[1] supports the Commissioner of Taxation (the Commissioner) in executing their duties, powers and functions conferred as:

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administrator of the tax and superannuation systems

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Agency Head under the Public Service Act 1999, which confers powers and functions on the Agency Head including those relating to Australian Public Service employees and employer responsibilities

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accountable authority under the Public Governance, Performance and Accountability Act 2013, which confers powers and functions on the accountable authority relating to the governance, reporting and use of public resources, and

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Registrar of the Australian Business Registry Services (the Registrar) under the Commonwealth Registers Act 2020.

The Framework comprises various policy products.

Law administration practice statements (practice statements) are Tier 1 corporate policy documents under the Framework. They provide lawful and reasonable directions to ATO staff when administering the tax and superannuation systems administered by the Commissioner and business registry laws administered by the Registrar.

2. What are practice statements?

There are 2 series of practice statements - the standard series (such as this one) and the general administration series. General administration practice statements are identified by the suffix of (GA) after their number.^[2] We no longer prepare general administration practice statements.^[3]

Practice statements are policy documents, providing mandatory instructions and guidance to ATO staff on how they should undertake technical work^[4], assisting ATO staff to perform their duties and make decisions about the laws they administer.

While they may discuss technical issues^[5], practice statements do so in a way to give sense to the instructions they are providing. They are not intended to provide interpretative advice and do not express precedential ATO views.^[6]

Even though ATO staff are the primary audience for a practice statement, in the interest of open tax administration, they are published externally.

If a taxpayer relies on a particular practice statement that is incorrect or misleading and makes a mistake as a result, they will remain liable for any resulting tax shortfall, but will be protected against:

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any shortfall penalty that would otherwise arise^[7], and

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interest charges on the shortfall, if the particular practice statement was reasonably relied on in good faith.^[8]

3. What are your responsibilities in relation to practice statements?

Responsibilities as an author

Policy instructions and guidance that direct and assist staff in applying the laws administered by the Commissioner should be issued in the form of a practice statement. Other communications (for example, office minutes or practice notes) should not be used for this purpose, except as an interim measure while a practice statement is being developed.

Additional practice notes, guidelines, work instructions or other tools can be issued to support the implementation of the policy outlined in a practice statement and may provide further detailed guidance and procedures to assist staff. When developing such subordinate products, staff should ensure that the underlying intent of the practice statement is maintained and include a link and a reference to the practice statement.

Responsibilities as a user

When performing your duties, it is your responsibility to check whether there are any relevant practice statements to consider and follow.

If you think that the application of a particular practice statement has an unintended consequence or that it is incorrect, you must escalate the matter using your business line escalation process.

4. When should a practice statement be developed?

The following factors may assist in determining whether a practice statement is the appropriate product to develop:

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The primary audience is ATO staff.

Is your principal purpose to provide direction and assistance to ATO staff? The primary audience for the practice statement should be ATO staff, even if the content may also be of interest to taxpayers or tax practitioners.

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The proposed content is predominantly policy.

Does the content provide directions and guidance to assist ATO staff perform duties and make decisions about the practical application of the laws we administer? If so, it is policy and a practice statement is appropriate.

The policy outlined in practice statements may provide the framework for establishing other detailed guidance and procedures to assist staff undertake specific tasks (for example, in the form of practice notes and other internal procedures).

Where the proposed content intends to establish a precedential ATO view or provide new or detailed interpretative guidance on an issue, a practice statement would not be appropriate. You should consult with your business line Public advice and guidance (PAG) Unit or the PAG Governance team (links available internally only) in the Office of the Chief Tax Counsel to determine the most appropriate product.^[9]

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Policy needs to be formalised, made consistent or centralised.

To what extent is information already available on the proposed content? Practice statements are authoritative sources of policy content to assist interpretive decision-making. Consider how the potential practice statement will fit into any existing hierarchy of advice and guidance and if the current content is in an appropriate form or, more correctly, belongs in a practice statement format. Ensure consistency between multiple documents is maintained.

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Development of a practice statement has been agreed between the business line PAG Unit and other ATO stakeholders.

Have you consulted within the ATO on the content and has it been agreed that a practice statement is appropriate? New practice statements will need to be notified to, and considered by the PAG Steering Committee (link available internally only) in accordance with the procedures referred to in Section 5 of this Practice Statement.

5. How is a practice statement developed?

Follow the procedures for developing PAG products in PAG development procedures - end to end (link available internally only) to develop a new practice statement.

This will ensure:

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the corporate processes applying to the development of PAG are undertaken consistently

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any practice statements developed are subject to the appropriate approvals and governance processes and involve the relevant ATO stakeholders, including business line risk owners, authors and relevant PAG Units, the Office of the Chief Tax Counsel (including PAG Governance, Law Publishing and the Tax Counsel Network) and the PAG Steering Committee, where appropriate.

6. Who maintains a practice statement?

Practice statements are 'owned' by a business line (practice statement owner) that must maintain the currency of that practice statement.

In doing so, a date for maintenance (a 'maintenance review date') should be recorded when a practice statement is published or updated.

The maintenance review date should reflect the particular circumstances and subject matter of the practice statement and should not, generally, be set more than 3 years into the future.

This date will be recorded by Law Publishing and reported on by PAG Governance, to ensure practice statement owners satisfy the maintenance obligations for practice statements.

Sometimes an event triggers the need for a practice statement to be revised, regardless of the recorded maintenance review date. For example, when:

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new primary legislation is passed or existing legislation is amended

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a decision is handed down by a court or tribunal

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new PAG is published that affects the content of the practice statement

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existing policy or procedures are updated as a result of a project, internal name changes or other changes.

If a practice statement is reviewed prior to its review date (for example, in response to a court decision), the whole document should be reviewed and a new review date set.

In undertaking a review, the practice statement owner will decide whether it requires significant changes, care and maintenance updates, withdrawal or no change.

Substantial changes to or withdrawal of an existing practice statement will need to be notified to, and considered by the PAG Steering Committee, in accordance with the procedures referred to in Section 5 of this Practice Statement.

The practice statement owner must also ensure consistency with any related:

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policies and procedures, including practice notes, office minutes, work instructions or other tools

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guidance, including content on ato.gov.au, public rulings or practical compliance guidelines, where applicable.

Practice statement owners are also required to consider whether the policies outlined in the practice statement are being applied appropriately and effectively when undertaking conformance monitoring and reporting. At a minimum, this should be undertaken on the maintenance review date but may be conducted more frequently.

7. More information

For more information:

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view the Law administration practice statements Enterprise Knowledge Management page (link available internally only)

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view practice statements on ATOlaw (internal) or Legal Database (external)

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view Chief Executive Instruction ATO Conformance with obligations (link available internally only)

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contact PAG Governance in the Office of the Chief Tax Counsel.

Amendment history

Also previously amended on 20 December 2002, 4 May 2003 and 9 June 2005

Date of Issue: 17 December 1998

Date of Effect: 17 December 1998

File 98/117644; 1-126KOUU8

Related Practice Statements:
PS LA 2003/3
PS LA 2004/24
PS LA 2008/3

Other References:
ATO Compliance with obligations (link available internally only)
ATO Policy Framework (link available internally only)
Law administration practice statements (link available internally only)
PAG development procedures - end to end (link available internally only)

Legislative References:
TAA 1953 Sch 1 284-224
TAA 1953 Sch 1 361-5
Public Service Act 1999
Public Governance, Performance and Accountability Act 2013
Commonwealth Registers Act 2020

Authorised by:
Michael D'Ascenzo

Business Line:  OCTC

ISSN: 2651-9526