House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Treasurer, the Hon Wayne Swan MP

Chapter 2 - Adopting the general rulings system for indirect taxes and excise

Outline of chapter

2.1 Schedule 2 to this Bill amends the Taxation Administration Act 1953 ( TAA 1953), the A New Tax System (Goods and Services Tax) Act 1999 ( GST Act), the Excise Act 1901 ( Excise Act) and the Income Tax Assessment Act 1997 ( ITAA 1997) to include indirect tax rulings and excise advice in the general rulings regime. All references are to the TAA 1953 unless otherwise specified.

Context of amendments

2.2 Schedule 2 implements the Government's response to the Board of Taxation's Review of the Legal Framework for the Administration of the GST which recommended harmonising the indirect tax rulings system with the general ruling system.

2.3 Under the current law, indirect tax rulings are issued under the Commissioner of Taxation's (Commissioner) power of general administration of indirect tax. Administratively binding advice for excise is issued under the Commissioner's powers of general administration. There is currently no express legislative framework for indirect tax rulings and excise advice, and no formal objection or review rights.

2.4 The intention of harmonising indirect tax rulings and excise advice with the general rulings system is to simplify the tax law and provide consistent rules that apply across different taxes. Specific differences between the rulings regimes are retained only where essential characteristics of the different taxes require a different approach.

2.5 It is not intended that any changes be made to how the existing rulings regime generally applies for taxes currently covered by that regime. In addition, private indirect tax rulings in operation immediately prior to 1 July 2010 are treated as if made under the revised ruling regime. This ensures that the rulings remain valid and do not impose additional compliance costs on affected parties by requiring new rulings to be obtained. Indirect tax rulings in operation immediately prior to 1 July 2010 that are gazetted or labelled as public rulings are also treated as if made under the revised ruling regime.

2.6 Given the concerns expressed during consultation, the Board of Taxation's recommendation that one party to a supply be able to rely on rulings issued to the other party to the supply has not been implemented. However, adopting the broader rulings regime means the Commissioner can issue class and product rulings concerning indirect tax and excise. Suppliers and recipients can also still apply jointly for private rulings.

Summary of new law

2.7 This Schedule broadens the scope of the general rulings system to extend it to the goods and services tax (GST), the luxury car tax (LCT), the wine equalisation tax (WET) and excise duty. This ensures that, where possible, consistent rules for tax rulings apply across different taxes.

2.8 This allows the Commissioner to issue public and private indirect tax and excise rulings to taxpayers that are legally binding on the Commissioner in relation to these taxes and excise duty. The adoption of the general rulings regime for indirect tax and excise duty introduces a range of features which include the right to object to a private indirect tax or excise ruling.

2.9 The amendments apply to rulings made by the Commissioner on or after 1 July 2010. They also apply to:

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private indirect tax rulings that have been applied for, or are in operation, immediately before 1 July 2010; and

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public indirect tax rulings that are gazetted or labelled as public rulings and are in operation immediately before 1 July 2010,

in order to reduce any transitional compliance costs resulting from the changes.

Comparison of key features of new law and current law

Detailed explanation of new law

2.10 These amendments include indirect tax rulings and excise advice in the general rulings regime available for income tax and other taxes, and are intended to reduce compliance costs for taxpayers by providing generally consistent rules across different taxes. Where necessary, limited differences have been maintained for indirect tax and excise rules reflecting the specific characteristics of these taxes and duties.

Inclusion in the general rulings regime

2.11 The extension of the general rulings regime to include indirect tax rulings and excise advice brings indirect tax, excise duty, net amounts, wine tax credits and their administration and the payment or collection of a net amount or wine tax credit, all within the scope of the general regime. As the regime applies, amongst other things, to net amounts, it allows for rulings relating to components that make up the net amount (for example, input tax credits and adjustments). Excise advice extends to the administration or collection of excise duty (for example, provisions under the Excise Act about the administration or collection of excise duty) . [Schedule 2, items 24 to 26, paragraphs 357-55(fb), (fc), (g), (j) and (k) of Schedule 1 to the TAA 1953]

2.12 This ensures that the common rules for rulings and specific rules for public rulings and private rulings apply to indirect taxes and excise, subject to any specific modifications. This allows the Commissioner to issue public rulings, including product and class rulings and private rulings to taxpayers, that are legally binding on the Commissioner. The adoption of the general rulings regime for indirect tax rulings and excise advice introduces a range of features for indirect tax and excise. Some of these features include:

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Public rulings can cover any matter involved in the application of a provision, including matters relating to administration, collection and ultimate conclusions of fact.

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Private rulings may cover anything involved in the application of the provision, including valuations. The Commissioner may charge for a private ruling on a valuation issue.

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If a taxpayer has applied for a private ruling and the Commissioner has not made the ruling or declined to make the ruling within 60 days, and an event that extends that time has not occurred, then the applicant can issue a written notice requiring the Commissioner to make the ruling. If the Commissioner does not make the ruling or declines to rule within 30 days, then the taxpayer has an objection right.

•

The Commissioner may rely on information from other sources, provided the Commissioner tells the applicant what the information is, and gives them a reasonable opportunity to respond before making the private ruling.

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The Commissioner can make assumptions about a future event or other matter for a private ruling, provided the Commissioner informs the applicant of the assumptions and gives the applicant a reasonable opportunity to respond.

Right of objection

2.13 With the incorporation of indirect tax and excise rulings into the general rulings regime, taxpayers that obtain an indirect tax or excise private ruling have a right to object against that ruling under subsection 359-60(1). This contrasts with the situation under the current law in which to dispute the Commissioner's interpretation of an indirect tax law, a taxpayer who obtains a private indirect tax ruling would ordinarily need to request that the Commissioner issue an assessment and object against that assessment to formally test the issue.

2.14 Consistent with the general rulings regime, if a taxpayer objects to a private indirect tax or excise ruling then their right of objection against an assessment is limited to matters that they were not able to raise as grounds for objection against the private ruling. This ensures that there is a single avenue to object and prevents duplicate objections from being made . [Schedule 2, item 19, section 14ZVA]

2.15 An amendment also ensures that objections cannot be lodged against a private ruling if other events occur which provide an alternative means to object to an indirect tax or excise liability. These include:

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in the case of indirect tax, where there is an assessment to which the ruling relates; and

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in the case of excise, where the Commissioner has made a decision about the excise duty or other amount payable in relation to those goods and the decision is reviewable.

[Schedule 2, item 43, paragraph 359-60(3)(c) of Schedule 1 to the TAA 1953]

2.16 Where an objection has already been lodged against a private ruling, there is a further provision in the case of excise that also prevents duplication of dispute avenues of review where there is an objection to a private ruling in relation to the rate of duty or liability to duty. Section 154 of the Excise Act provides for a right of review where there is a dispute as to the amount of duty payable on excisable goods. If a taxpayer has already obtained a private ruling concerning the amount of duty payable on excisable goods, and has objected against the ruling, their ability to commence legal action under section 154 of the Excise Act is limited to grounds that neither were, nor could have been, grounds for objecting against the ruling. This restriction is additional to the amendments to section 14ZVA of the TAA 1953, as this section only applies to decisions made under the Excise Act giving rise to review under Part IVC of the TAA 1953 . [Schedule 2, item 6, section 155 of the Excise Act]

Example 2.1 : Excise objection

A licensed manufacturer anticipates manufacturing a new type of excisable good. They seek a private ruling as to the amount of duty that would be payable on the good. They do not accept the amount advised by the Commissioner in the ruling and they lodge an objection. Subsequently, they commence manufacture of the excisable goods. They pay the amount of duty that the Commissioner claimed was payable in the private ruling, and commence an action against the Commissioner under section 154 of the Excise Act. Their ability to commence an action under section 154 is limited to grounds that were not, and could not have been, grounds for objecting against the private ruling.

2.17 The amendments specify the time limit for lodging an objection against a private indirect tax ruling, which is the end of the latter of:

•

60 days after the ruling was made; or

•

four years after the end of the tax period, or importation of goods to which the ruling relates.

[Schedule 2, items 20 and 21, subsections 14ZW(1AAB) and (1A)]

2.18 Transitional provisions have been included so that a private indirect tax ruling that is in force immediately before 1 July 2010, is taken as if it had been made under the new rules. This enables objection rights to be pursued for existing private indirect tax rulings . [Schedule 2, subitem 46(2)]

2.19 It was not possible to extend this to excise advice, as only administratively binding advice (not rulings) has been able to be provided under the existing law.

Other changes

2.20 A new term indirect tax or excise ruling is added to the income tax definitions. It means a public or private ruling to the extent it relates to an indirect tax law or an excise law (other than a fuel tax law). The existing definitions of indirect tax rulings are repealed . [Schedule 2, items 9 to 12, definitions of 'indirect tax or excise ruling', 'indirect tax ruling', 'private indirect tax ruling' and 'public indirect tax ruling' in subsection 995-1(1) of the ITAA 1997]

2.21 A new term 'private indirect tax ruling' is added to the definitions in the taxation administration provisions. To ensure common definitions apply, three other terms are added to the taxation administration definitions:

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'excise law' has the meaning given by the ITAA 1997 [Schedule 2, item 13, subsection 2(1)];

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'fuel tax law' has the meaning given by the Fuel Tax Act 2006 [Schedule 2, item 14, subsection 2(1)]; and

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'indirect tax law' has the meaning given by the ITAA 1997 [Schedule 2, item 15, subsection 2(1)].

2.22 The definition of 'private ruling' has the meaning given in section 359-5 of Schedule 1 to the TAA 1953, and the existing definition of private ruling within the taxation administration provisions is repealed . [Schedule 2, items 16 to 18, subsection 2(1)]

2.23 A definition of 'excise duty' has been included in the income tax law to ensure that a common definition applies. The definition adopts the meaning given by the GST law which refers to any duty of excise imposed by a Commonwealth law. Under the general rulings regime the advice provided by the Commissioner is limited to the Acts and regulations of which the Commissioner has general administration. For example, as the Commissioner has general administration of the Excise Tariff Act 1921 the excise duty imposed under this Act is relevant for the purposes of the definition of 'excise duty' . [Schedule 2, item 7, definition of 'excise duty' in subsection 995-1(1) of the ITAA 1997]

2.24 A definition of 'excise law' has been included in the income tax definitions, which includes the Excise Act, any other Acts that impose excise duty, and related Acts . [Schedule 2, item 8, definition of 'excise law' in subsection 995-1(1) of the ITAA 1997]

Existing rules: reliance on the Commissioner's interpretation

2.25 Section 105-60 in Schedule 1 to the TAA 1953 provides rules where a taxpayer relies on the Commissioner's interpretation of an indirect tax law. This section has been repealed as a result of the inclusion of indirect tax rulings in the general ruling regime . [Schedule 2, items 22 and 23, sections 105-1 and 105-60 of Schedule 1 to the TAA 1953]

Additions to the general rulings regime

Inconsistent rulings

2.26 Many indirect tax and excise rulings relate to transactions that are long-term or recurring. As a result, the requirement in the general rulings regime for the income year or other period, or scheme not to have commenced, as a prerequisite to enable a ruling to be withdrawn or revised, is not relevant in the case of indirect tax or excise rulings.

2.27 There are special rules which set out the result for inconsistent indirect tax or excise rulings that are in operation. (This situation is distinct from where the Commissioner revises a private ruling. The revised private ruling only applies from the date it is issued or such later time as specified in the ruling.) Inconsistent rulings arise in circumstances where there are two or more conflicting rulings that apply to a taxpayer at the same time . [Schedule 2, items 30 to 33, subsections 357-75(1), (1A), (1B) and (2) of Schedule 1 to the TAA 1953]

2.28 Where an indirect tax or excise public ruling exists and a later inconsistent indirect tax or excise private ruling is issued by the Commissioner, the private ruling is taken to apply from the time specified in the ruling and at that time the public ruling is taken to cease to apply to the extent of the inconsistency. Where no time is specified in the private ruling, it is taken to apply from when the ruling is made, and at that time the public ruling ceases to apply to the extent of the inconsistency . [Schedule 2, item 32, subsection 357-75(1B) of Schedule 1 to the TAA 1953]

2.29 The same result occurs where an existing indirect tax or excise private ruling and a later inconsistent indirect tax or excise ruling is issued. The later ruling applies from the later of the time it is made or the time specified in the ruling, and at that time the existing ruling ceases to apply to the extent of the inconsistency. It does not matter whether the later ruling is a public or private ruling . [Schedule 2, item 32, subsection 357-75(1B) of Schedule 1 to the TAA 1953]

2.30 These modifications to the general rulings regime reflect the existing treatment of inconsistent rulings for indirect taxes.

2.31 Where an indirect tax or excise public ruling exists and a later inconsistent indirect tax or excise public ruling is issued by the Commissioner, taxpayers may rely on either ruling. In this case the outcome is the same as that under the broader rulings regime . [Schedule 2, item 32, subsection 357-75(1A) of Schedule 1 to the TAA 1953]

Example 2.2 : Inconsistent public indirect tax rulings

On 16 August 2010, the Commissioner issued a public ruling in relation to the GST treatment of chocolate-covered fruit. On 18 March 2011, he issued another public ruling, which was inconsistent, in part, with the earlier ruling. Taxpayers may rely on either ruling to the extent of the inconsistency, until one of the rulings is withdrawn.

Example 2.3 : Inconsistent public and private indirect tax rulings

The Commissioner issued a public ruling on 1 July 2010. On 15 September 2010 the Commissioner issued a private ruling to Steve's Fishing Supplies, which specified that it would apply from 25 October 2010. From that date, the public ruling ceased to apply to Steve's Fishing Supplies to the extent of the inconsistency between the two rulings.

Example 2.4 : Inconsistent private indirect tax rulings

The Commissioner issued a private ruling to J & M Building Services on 29 July 2010. On 30 December 2010 the Commissioner issued another private ruling to J & M Building Services. The second ruling was silent on the time from which it began to apply. This second ruling is taken to apply from the date it was made, which was 30 December 2010, and from that date, the earlier ruling ceases to apply to J & M Building Services to the extent of the inconsistency between the two rulings.

2.32 In the case where an inconsistent ruling deals with an indirect tax or excise law and another tax such as income tax, to the extent the ruling deals with indirect tax or excise, the indirect tax and excise rules apply. To the extent the ruling deals with another tax, the table in section 357-75 of Schedule 1 that sets out the rules for inconsistent rulings other than indirect tax or excise rulings applies.

GST payable

2.33 A feature of the GST is that an amount of input tax credit that a recipient can claim for a creditable acquisition is directly dependent on the amount of the GST payable by the supplier.

2.34 In business to business transactions, the input tax credits that a recipient claims should match the GST that the supplier pays if the recipient's acquisition is wholly creditable. This is because input tax credits reflect the amount of GST on the supply.

2.35 The GST treatment of a supply impacts on the input tax credits available to a recipient and this reflects the symmetry of the GST system. This is provided by section 11-25 of the GST Act. The tax invoice is a mechanism for communicating between a supplier and a recipient concerning the supplier's GST treatment of a supply.

Example 2.5 : Tax invoices and GST payable

A supplier issues a tax invoice which includes an amount of GST payable. The recipient will be able to claim an input tax credit provided the requirements of the GST Act are met.

If the supplier issues a tax invoice that shows that no GST is payable, then the recipient will not generally be able to claim an input tax credit.

2.36 The basic rules for working out the GST payable on a supply are contained in Subdivision 9-C of the GST Act. The basic rules may be affected by other provisions in the GST Act and other Acts.

2.37 The GST Act is also supported by various machinery provisions contained in the TAA 1953. In determining the net amount or the amount of GST payable, all provisions affecting the taxpayer's liability or entitlement to a refund including provisions contained in the TAA 1953 need to be taken into consideration . [Schedule 2, item 1, section 2-30 of the GST Act]

2.38 In the existing law, under subsection 105-60(2) of Schedule 1 to the TAA 1953, a taxpayer can rely on the Commissioner's interpretation where the Commissioner altered a previous indirect tax ruling. The effect of this is that the underpaid amount ceases to be payable. Once an underpaid amount ceases to be payable, this has an impact on the amount of the input tax credit that a recipient can claim for a creditable acquisition.

2.39 This provision provides protection for the entity that receives a ruling, such that if the ruling is incorrect, they are not liable for an amount of GST in excess of that determined in accordance with the ruling.

2.40 The protection of the ruling may reduce the amount of GST payable by a supplier that relies on a ruling. This is reflected in the calculation of the recipient's corresponding input tax credit under section 11-25 of the GST Act. Thus, input tax credits to which a recipient of a supply is entitled, are dependent on the GST liability of the supplier.

2.41 The amendments confirm the same outcome arises under the general rulings regime. As a result, in cases where a ruling has been issued, and the taxpayer relies on the ruling, the amendments expressly confirm that the GST payable on the supply is the amount worked out in accordance with the ruling . [Schedule 2, items 1 to 5, sections 2-30, 9-99, 11-25, 13-99 and 15-20 of the GST Act; and items 27 and 29, subsections 357-60(1) and 357-60(3) of Schedule 1 to the TAA 1953]

2.42 The provisions support the fundamental principle of GST that recipients should only be able to claim input tax credits to the extent that the supply to them is subject to GST.

2.43 These amendments include an example illustrating that in the context of GST, relying on a ruling involves acting consistently with the ruling in respect of the relevant transaction by issuing tax invoices and lodging a GST return in accordance with the ruling. Accordingly, if a supplier issues a recipient with a tax invoice showing GST payable on a transaction, the recipient's input tax credit entitlement (if any) cannot be affected by a ruling to the supplier providing that the supply is GST-free. This reflects that they have not relied on the ruling and the GST status of the supply must be determined from the specific circumstances of the transaction . [Schedule 2, item 28, subsection 357-60(1) of Schedule 1 to the TAA 1953]

Example 2.6 : Rulings and GST payable

Peter makes ongoing supplies of a particular food item to Lara. Peter obtains a private ruling from the Commissioner that the supplies are GST-free.

In making his December 2010 delivery to Lara, Peter relies on the ruling to:

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not include any GST in the price charged to Lara;

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not issue a tax invoice to Lara;

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lodge his business activity statement (BAS) on this basis; and

•

not pay GST in relation to this supply.

As there is no GST payable because the ruling provides that the supply is GST-free and Peter has relied on the ruling, Lara is not able to claim an input tax credit in relation to supplies to which the ruling applies even if the Commissioner's ruling is incorrect.

In March 2011 Peter makes a similar supply to Lara for which Peter would be entitled to rely on the ruling. Peter issues a tax invoice to Lara showing GST payable on the supply. Peter has not relied on the ruling. If the supply is in fact a taxable supply, and Lara's acquisition is a creditable acquisition, Lara can claim input tax credits in respect of the supply.

2.44 These amendments do not result in recipients being bound by rulings. It is the Commissioner that is bound by rulings. A ruling only impacts on the entitlement of the recipient if it is relied on by the supplier and affects the GST that is payable by the supplier.

Groups, joint ventures and incapacitated entities

2.45 These amendments clarify what happens where an indirect tax law makes a particular entity liable or entitled in respect of taxes or credits that would otherwise be the liability or entitlement of another entity. They also apply to adjustments. This occurs in cases of GST groups, joint ventures and incapacitated entities.

2.46 This Schedule ensures that an indirect tax or excise ruling binds the Commissioner in relation to both the representative entity and the member entity where both members rely on the ruling by acting or omitting to act in accordance with it . [Schedule 2, items 27 and 29, subsections 357-60(1) and (6) of Schedule 1 to the TAA 1953]

2.47 The representative entity is the representative member of a GST group, the joint venture operator, or the representative of an incapacitated entity. The member entity is the member of the GST group, the participant in the GST joint venture, or the incapacitated entity . [Schedule 2, item 29, subsection 357-60(5) of Schedule 1 to the TAA 1953]

Fuel tax credits

2.48 The fuel tax credits legislation adopted the general rulings regime when it came into operation on 1 July 2006. Accordingly, no changes have been made to the way in which the general rulings regime applies to the fuel tax credits legislation.

Exclusions from the general rulings regime

2.49 There are several areas in which modifications have been made to the general rulings regime so that they do not apply for indirect tax and excise rulings. These include oral rulings, end-dates for private rulings, revised rulings and trustees.

Oral rulings

2.50 Under the general rulings regime, an individual taxpayer may apply to the Commissioner for an oral ruling on how the Commissioner considers the law applies to them. This allows taxpayers with very simple affairs to rely on oral advice in much the same way as written private rulings.

2.51 Oral rulings are not currently available for indirect tax or excise. These taxes are business taxes and therefore the advice on such matters is not simple non-business advice.

2.52 These amendments provide that taxpayers cannot apply for oral rulings in relation to an indirect tax law (other than a fuel tax law) or an excise law . [Schedule 2, items 44 and 45, subsections 360-5(1) and (2A) of Schedule 1 to the TAA 1953]

End-dates for private rulings

2.53 Under the general rulings regime, if a private ruling does not specify an end time, it ceases to apply at the end of the income year or other accounting period in which it started to apply. The reason for having a default end time for a private ruling where no end time is specified is to provide certainty about the period covered by the ruling.

2.54 Consultation on the development of these changes to include indirect tax and excise rulings in the general rulings regime identified end-dates as an area where there was a need for a special rule for indirect tax rulings.

2.55 This Schedule amends the law so that an indirect tax or excise private ruling that does not specify an end date continues to apply until it is withdrawn or replaced by the Commissioner. This is consistent with the existing law for rulings dealing with indirect tax, allowing the Commissioner to set an end date if necessary, but allowing flexibility to provide for unlimited application until the ruling is replaced or withdrawn . [Schedule 2, items 35 and 36, subsection 359-25(4) of Schedule 1 to the TAA 1953]

Revised rulings

2.56 Under the general rulings regime, the Commissioner cannot revise a private ruling after the scheme to which the ruling relates, or the income year or other accounting period has begun.

2.57 The term 'scheme' can capture events or circumstances beyond the supply itself. The general rulings regime treats a scheme as having begun to be carried out when the contract has been entered into. However, the time when a contract is entered into is different to the time when taxable supplies are provided under the contract.

2.58 Under the existing law, the Commissioner can change an indirect tax ruling at any time. The flexibility for the Commissioner to withdraw or replace an indirect tax ruling ensures that competing suppliers of goods or services are not disadvantaged in selling to consumers when one supplier obtains a favourable ruling that is not available to its competitors. This is a feature that is preserved in this Schedule.

2.59 This Schedule excludes indirect tax and excise rulings from the general rules in relation to the commencement of the scheme or tax period. The result is that the Commissioner is able to revise an indirect tax or excise ruling and the revised ruling applies to transactions occurring after that time. The revised ruling only applies to the extent that it is inconsistent with an earlier ruling, and applies from the date it is issued or such later time as specified in the private ruling . [Schedule 2, items 39 to 42, paragraph 359-55(1)(b), subsection 359-55(1) note, subsections 359-55(3) and (5) of Schedule 1 to the TAA 1953]

2.60 The ability of the Commissioner to specify a later date from which a revised ruling will apply, provides flexibility so that in appropriate cases the Commissioner can provide a reasonable period for taxpayers to take into account the new ruling.

2.61 Under the general rulings regime, a public ruling applies from when it is published or from a specified earlier or later time. However, such a ruling does not apply to a scheme that has commenced if the ruling is less favourable than a general administrative practice that applies to a scheme. A public ruling that is withdrawn continues to apply to schemes that had begun to be carried out before the withdrawal. This Schedule modifies these rules in relation to indirect tax and excise rulings as set out above . [Schedule 2, item 34, subsections 358-10(2) and 358-20(3) of Schedule 1 to the TAA 1953]

Trustees

2.62 Under the general rules, only the entity that receives a private ruling can rely on it.

2.63 A special rule ensures a private ruling given to or for the trustee of a trust and relating to the affairs of the trust also applies to another trustee appointed to replace the trustee, or to the beneficiaries of the trust.

2.64 This rule is important in the income tax context because beneficiaries may be subject to tax on the income of the trust under section 97 of the Income Tax Assessment Act 1936. It is therefore appropriate that they receive the protection of income tax and related private rulings given to the trustee.

2.65 In the indirect tax context, the beneficiary could be the recipient of a supply from the trustee. Where the beneficiary is dealing with the trustee of a trust, a rule which makes a private ruling given to the trustee apply to the beneficiary may have an unintended effect. Therefore it is not appropriate for this special rule to be extended to cover indirect tax.

2.66 Similarly the excise legislation imposes an excise liability on the entity that manufactures or deals with the goods. Accordingly, if a trustee undertakes such activities, excise obligations are not generally imposed on beneficiaries of the trust.

2.67 As the special rule is not appropriate in the indirect tax and excise context, a carve-out to the special rule has been included in the amendments. As a result, an indirect tax or excise private ruling given to a trustee does not apply to a beneficiary of the trust . [Schedule 2, items 37 and 38, paragraphs 359-30(a) and (b) of Schedule 1 to the TAA 1953]

2.68 However, the general rulings system does apply to trusts in other respects. As a result, a private ruling given to a trustee applies to a trustee replacing an earlier trustee.

Application and transitional provisions

Application provisions

2.69 The amendments made by this Schedule apply to rulings made on or after 1 July 2010. These amendments also apply in some circumstances to rulings requested before 1 July 2010. This is dealt with in the transitional provisions.

Transitional rules

2.70 This Schedule applies the general rulings system to indirect tax private rulings that are in operation immediately before 1 July 2010. This ensures that the adoption of the general rulings regime does not force taxpayers to seek revised private rulings or for the Commissioner to need to reissue existing rulings with resulting compliance cost impacts for taxpayers . [Schedule 2, subitem 46(2)]

2.71 Currently, what is regarded as a public indirect tax ruling is very broad and covers all advice given or published by the Commissioner on an indirect tax law. In its review, the Board of Taxation found that this means there is no scope for the Commissioner to publish simplified general advice without it being classified as a public ruling and this undermines the provision of simple advice and increases the complexity of advice given. The Board noted that a consequence of adopting the income tax ruling system for indirect tax would be that the range of documents that are considered public rulings would be reduced. It found that this would enable the Commissioner to publish simplified, more readily accessible advice that meets the needs of different classes of taxpayers.

2.72 These amendments ensure that only those rulings that are labelled as a public ruling (or were described in the Gazette in which they were published as a public ruling) that are in operation immediately before 1 July 2010 are public rulings under the new rules. This is consistent with the broader rulings regime . [Schedule 2, subitem 46(3)]

2.73 As existing private and public indirect tax rulings are treated as if made under the revised ruling regime, all of the content within those rulings is preserved, and has ruling status. This includes the explanation and example sections of existing public indirect tax rulings.

2.74 The general rulings regime also applies to an application for a private GST, LCT or WET ruling that was with the Commissioner immediately before 1 July 2010 where the ruling had not been made or the application declined by the Commissioner or the application withdrawn by the taxpayer . [Schedule 2, subitem 46(4)]