Practice Statement Law Administration

PS LA 2012/1

Engaging Tax Counsel Network on tax technical issues

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This Law Administration Practice Statement outlines when and how to engage Tax Counsel Network on significant risk tax technical issues.

1. What is this Practice Statement about?

This Practice Statement sets out principles for when you must refer a tax technical issue to Tax Counsel Network (TCN) and how to do so.

A 'tax technical issue' relates to the interpretation of a law administered by the Commissioner.

2. When TCN engagement is mandatory

You must engage TCN as early as possible for:

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the application of the general anti-avoidance provisions – that is, Part IVA or section 45B of the Income Tax Assessment Act 1936, or similar provisions in any other tax legislation

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strategic litigation

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all cases where we intend to seek tax technical advice from external counsel or a panel firm (not limited to litigation matters)

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perceived U-turns – that is, matters where it is in issue whether the ATO view should be applied prospectively (see Law Administration Practice Statement PS LA 2011/27 Determining whether the ATO's view of the law should be applied prospectively only

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proposed public rulings and practical compliance guidelines or updates to these (except: care and maintenance or annual product updates; and class or product rulings covering moderate or low risk technical issues)

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any technical issue rated with a significant or higher risk (including those arising in case work, non-strategic litigation and in other public advice or guidance (PAG) products, such as web content or Practice Statements).

3. Assessing the risk of an issue

Business lines assess the risk associated with technical issues using the Enterprise Risk Management Framework (ERMF) (link available internally only).

As technical matters may be an enterprise-level risk, the approach should employ the same 6 levels as the ERMF (low, moderate, significant, high, severe and catastrophic). The Guide to assessing technical issues for risk and priority (link available internally only) provides a method to help you to gauge the level of risk using the ERMF.

Where the risk is assessed as 'significant or above', you must engage TCN.

4. How to engage TCN

The standard procedure for engaging TCN is through a Siebel referral, as set out in How to engage Tax Counsel Network (TCN) (link available internally only).

Some work types (usually of lower priority or high volume) may have streamlined engagements. In these cases, referral remains mandatory, but the process for the referral or for completing the engagement is streamlined. Streamlined engagements must be authorised by a Deputy Commissioner in TCN.

For urgent matters, it may be appropriate for you to directly contact someone in TCN before following with a formal referral.

While you may also contact someone in TCN for an informal discussion or assistance, you will need to complete a Siebel referral for any matter that requires more than a nominal investment of TCN time.

5. Terms used and related information

Strategic litigation is defined in Law Administration Practice Statement PS LA 2009/9 Conduct of ATO litigation and engagement of ATO Dispute Resolution.

For PAG:

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You will need to follow relevant PAG notification procedures, regardless of whether TCN needs to be engaged.

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Proposed updates to published PAG are care and maintenance when the work will not change any view or position expressed in the product, be it technical or administrative. Any change to an ATO view means the update is not care and maintenance.

TCN involvement in objections must follow Law Administration Practice Statement PS LA 2023/2 Communication protocols governing ATO objections.

Amendment history

Date of Issue: 10 April 2012

Date of Effect: 10 April 2012

File 1-ZT4S8O4

Related Practice Statements:
PS LA 2009/9
PS LA 2011/27
PS LA 2023/2

Other References:
Enterprise Risk Management Framework (ERMF) (link available internally only)
Guide to assessing technical issues for risk and priority (link available internally only)
How to engage Tax Counsel Network (TCN) (link available internally only)

Legislative References:
ITAA 1936 Part IVA
ITAA 1936 45B

Business Line:  OCTC