House of Representatives

Supplementary Explanatory Memorandum

Amendments to be moved on behalf of the Government (Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 9 - Reliance on the Commissioner's interpretation of the law

Background

9.1 Section 37 of the TAA 1953 ensures that taxpayers are able to rely on the Commissioner's interpretation of the indirect tax law as expressed in public rulings or private rulings. If there has been an underpayment of indirect tax, but that underpayment was made in reliance on a ruling, the section treats the underpaid amount as not being payable.

9.2 Underpaid tax ceases to be payable if it relates to taxable supplies, taxable importations or taxable dealings made before another ruling is made to alter the earlier ruling. Similarly, an amount overpaid as a refund by the Commissioner that relates to such transactions will remain payable.

9.3 As the provision now stands, the protection it confers on taxpayers may not be available if the subject of a change in the Commissioner's interpretation of the law is the entitlement to an input tax credit.

Explanation of the amendment

9.4 The amendment will extend the application of section 37 to cover underpayments of tax (or overpayments of refunds by the Commissioner) that result from reliance on rulings that relate to creditable acquisitions or creditable importations. It will ensure that rulings on the entitlement to input tax credits can be relied on in the same way as rulings on the liability to indirect tax. [Amendment 115, new subparagraph 37(1)(b)(iv)]