A New Tax System (Tax Administration) Act 1999 (179 of 1999)

Schedule 3   Binding oral advice on income tax matters

Part 1   Amendment of the Taxation Administration Act 1953

1   At the end of Schedule 1

Add:

[The next Division is Division 360.]

Part 5-5 - Rulings

Division 360 - Oral rulings for individuals

Table of Subdivisions

Guide to Division 360

360-A Applying for an oral ruling

360-B How the Commissioner is to deal with the application

360-C When Commissioner must or can refuse the application

360-D Miscellaneous

Guide to Division 360

360-1 What this Division is about

An individual can apply to the Commissioner for an oral ruling about a limited range of matters under an income tax law.

360-5 Outline of this Division

(1) The procedure you need to follow in applying for an oral ruling is set out in Subdivision 360-A.

(2) Before making the ruling, the Commissioner must be satisfied that your tax affairs, and your inquiry, meet certain tests.

See sections 360-65 and 360-100.

(3) There are further matters that may prevent the Commissioner from making the ruling. Important examples are:

(a) during the relevant period you were carrying on a business;

(b) during the relevant period you made payments from which you had to withhold amounts under Part 2-5 (PAYG withholding).

See Subdivision 360-C.

(4) An oral ruling is binding on the Commissioner, but only you can rely on it.

See sections 170BCA, 170BDA, 170BDB and 170BDC
of the Income Tax Assessment Act 1936.

(5) You are not bound by an oral ruling.

Subdivision 360-A - Applying for an oral ruling

Table of sections

360-20 Application for oral ruling about your own tax

360-25 Application for oral ruling about someone else's tax

360-30 What the application can cover

360-35 How the application is to be made

360-40 Further information may be sought

360-20 Application for oral ruling about your own tax

If you are an individual, you may apply to the Commissioner for a ruling on the way in which, in the Commissioner's opinion, an *income tax law would apply to you in respect of an income year in relation to an *oral ruling arrangement.

360-25 Application for oral ruling about someone else's tax

(1) You may apply to the Commissioner, on another person's behalf, for a ruling on the way in which, in the Commissioner's opinion, an *income tax law would apply to the other person in respect of an income year in relation to an *oral ruling arrangement.

(2) However, you may do so only if the other person is an individual, and:

(a) the other person is under 18 and is your *child; or

(b) the other person is under 18 and you have in relation to him or her all the duties, powers, responsibilities and authority which, by law, a parent has in relation to his or her child; or

(c) the other person is under a legal disability because of a mental impairment, and you hold an enduring power of attorney in relation to him or her; or

(d) the other person:

(i) is under 18; or

(ii) has a physical or mental impairment;

and an *Australian law authorises you to act on his or her behalf in matters including his or her *tax affairs.

(3) If you apply on another person's behalf, the rest of this Division has effect as if the other person had made the application himself or herself, but:

(a) you may communicate with the Commissioner, and otherwise deal with him or her, as if you were the other person; and

(b) the Commissioner may communicate with you, and otherwise deal with you, as if you were the other person.

360-30 What the application can cover

(1) The application may relate to:

(a) a past income year; or

(b) the income year in which the application is made.

It cannot relate to a future income year, or to more than one income year.

(2) An oral ruling arrangement is:

(a) an action; or

(b) a course of action; or

(c) a course of conduct; or

(d) a transaction;

that has been, is being, or is proposed to be, engaged in, entered into or carried out, but only if none of the parties to it is an *associate of any of the others.

(3) The application may be for a ruling on the way in which the Commissioner would act under the *income tax law to which the application relates.

(4) Subsection (3) covers the following kinds of acts:

(a) forming an opinion; or

(b) refusing or failing to form an opinion; or

(c) attaining a state of mind; or

(d) refusing or failing to attain a state of mind; or

(e) making a determination; or

(f) refusing or failing to make a determination; or

(g) exercising a power; or

(h) refusing or failing to exercise a power.

360-35 How the application is to be made

(1) You must make the application orally, either in person or by live 2-way conversation using a method of communication approved by the Commissioner.

(2) When making the application, you must:

(a) identify yourself to the Commissioner's satisfaction; and

(b) if you make the application on behalf of another person, identify the other person to the Commissioner's satisfaction; and

(c) give whatever information, in whatever form, the Commissioner requires in order to make the ruling.

(3) You may withdraw the application before the ruling is made. You must do so orally, either in person or by live 2-way conversation using a method of communication approved by the Commissioner.

360-40 Further information may be sought

If the Commissioner considers that:

(a) the ruling cannot be made without further information; and

(b) if that information were given, there would be no reason for the Commissioner not to comply with your application;

the Commissioner must request you to give that information to him or her.

Subdivision 360-B - How the Commissioner is to deal with the application

Table of sections

Exercise of powers by delegate

360-60 Delegated power must be exercised at specified place

If the application relates only to basic categories

360-65 When Commissioner must make oral ruling

360-70 Basic categories of assessable income

360-75 Basic categories of exempt income

360-80 Basic categories of deductions

360-85 Basic categories of tax offsets

If the application involves additional categories

360-100 When Commissioner must make oral ruling if satisfied that your tax affairs and inquiry are simple

360-105 Additional categories of assessable income

360-110 Additional categories of deductions

360-115 Additional categories of tax offsets

If the application is successful

360-120 Making the oral ruling

Exercise of powers by delegate

360-60 Delegated power must be exercised at specified place

(1) If the Commissioner delegates to a person a function or power the Commissioner has under this Division, the person must perform the function, or exercise the power, only at places specified in the delegation.

(2) If the person is at such a place, he or she may, in order to perform the function or exercise the power, communicate with a person who is not at such a place by live 2-way conversation using a method approved by the Commissioner.

If the application relates only to basic categories

360-65 When Commissioner must make oral ruling

(1) The Commissioner must comply with your application if he or she is satisfied that:

(a) your application complies with Subdivision 360-A; and

(b) your assessable income for the inquiry period consisted only of one or more items covered by section 360-70; and

(c) during the inquiry period no *CGT event happened from which you could have made a *capital gain or *capital loss (even if you did not make one from the event); and

Note: You are not disqualified by having an unapplied net capital loss for a previous income year.

(d) your *exempt income (if any) for the inquiry period consisted only of one or more items covered by section 360-75; and

(e) your deductions for the inquiry period consisted only of one or more items covered by section 360-80; and

(f) your *tax offsets for the inquiry period consisted only of one or more items covered by section 360-85; and

(g) your application relates only to an item covered by section 360-70, 360-75, 360-80 or 360-85;

unless Subdivision 360-C prevents the Commissioner from complying with the application.

Note: For an alternative basis on which the Commissioner must comply with your application, see section 360-100.

(2) The inquiry period is:

(a) if your application relates to an earlier income year - that income year; or

(b) if your application relates to the income year during which the application is made - so much of the income year as elapses up to and including the day on which you make the application.

360-70 Basic categories of assessable income

(1) This section covers a payment from which an amount must be withheld (even if the amount is not withheld) under a provision listed in the table, to the extent that the payment is assessable income.

(2) This section also covers a payment specified in a provision of the Income Tax Assessment Act 1997 listed in the table, to the extent that the payment is assessable income.

(3) This section also covers interest payable by a *financial institution or a government body (as defined by section 202A of the Income Tax Assessment Act 1936), to the extent that the interest is assessable income.

(4) This section also covers a *dividend (to the extent that it is assessable income), if the company that pays it is an Australian resident, and a *listed public company whose shares are listed for quotation in the official list of the Australian Stock Exchange Limited, at the earliest of the following times:

(a) if the liability to pay the dividend arises when the dividend is declared - that time;

(b) when the dividend becomes due and payable;

(c) when the dividend is paid.

360-75 Basic categories of exempt income

This section covers *ordinary income, or *statutory income, to the extent that it is *exempt income because of:

(a) subsection 23L(1) of the Income Tax Assessment Act 1936 (about fringe benefits); or

(b) a provision of the Income Tax Assessment Act 1997 listed in the table.

360-80 Basic categories of deductions

This section covers a deduction for:

(a) an amount of expenditure you incur for managing your *tax affairs as mentioned in paragraph 25-5(1)(a) of the Income Tax Assessment Act 1997; or

(b) an amount of an account-keeping fee charged by a *financial institution; or

(c) an amount of a tax imposed under an *Australian law on an account kept with a financial institution (for example, financial institutions duty, debits tax or a similar tax); or

(d) an amount of money that is a gift or contribution to which item 1, 2 or 3 of the table in section 30-15 of the Income Tax Assessment Act 1997 applies.

360-85 Basic categories of tax offsets

This section covers a *tax offset to which you are entitled because of:

(a) Subdivision 61-H of the Income Tax Assessment Act 1997 (about premiums under a private health insurance policy); or

(b) a provision of the Income Tax Assessment Act 1936 listed in the table.

If the application involves additional categories

360-100 When Commissioner must make oral ruling if satisfied that your tax affairs and inquiry are simple

(1) The Commissioner must also comply with your application if:

(a) he or she is satisfied that your application complies with Subdivision 360-A; and

(b) in his or her opinion, your *tax affairs were simple throughout the *inquiry period; and

(c) in his or her opinion, your inquiry is simple; and

(d) he or she is satisfied that your assessable income for the inquiry period consisted only of one or more items, each of which is covered by section 360-70 or 360-105; and

(e) he or she is satisfied that your *exempt income (if any) for the inquiry period consisted only of one or more items covered by section 360-75; and

(f) he or she is satisfied that your deductions for the inquiry period consisted only of one or more items, each of which is covered by section 360-80 or 360-110; and

(g) he or she is satisfied that your *tax offsets for the inquiry period consisted only of one or more items, each of which is covered by section 360-85 or 360-115; and

(h) he or she is satisfied of the matters in subsections (2), (3) and (4) (about your capital gains tax situation);

unless Subdivision 360-C prevents the Commissioner from complying with the application.

CGT events

(2) The Commissioner must be satisfied that during the inquiry period no *CGT event happened from which you could have made a *capital gain or *capital loss (even if you did not make one from the event), except a CGT event from which you could have made a *capital gain or *capital loss covered by subsection (3).

Capital gains and losses

(3) The Commissioner must be satisfied that each *capital gain (if any), and each *capital loss (if any), that you made during the inquiry period:

(a) is to be disregarded because of section 118-5 of the Income Tax Assessment Act 1997 (about cars, motor cycles and valour decorations); or

(b) resulted from *CGT event A1 happening in relation to shares in a company that was an Australian resident and a *listed public company, and whose shares were listed for quotation in the official list of the Australian Stock Exchange Limited, throughout the period when you owned the first-mentioned shares; or

(c) resulted from *CGT event A1 or E4 happening in relation to units in a unit trust that was a *resident trust for CGT purposes and a *listed widely held trust, and whose units were listed for quotation in the official list of the Australian Stock Exchange Limited, throughout the period when you owned the first-mentioned units.

Note: Similarly, you are not disqualified if CGT event E4 results in a reduction in the cost base of your units, rather than in a capital gain.

Net capital loss for an earlier income year

(4) If during the *inquiry period you made one or more *capital gains each of which is covered by paragraph 360-100(3)(b) or (c), the Commissioner must be satisfied that you have no unapplied *net capital loss for an earlier income year.

Note: You are not otherwise disqualified by having an unapplied net capital loss for a previous income year.

360-105 Additional categories of assessable income

This section covers the following, to the extent that they are assessable income:

(a) a payment from which an amount must be withheld (even if the amount is not withheld) under a provision listed in the table;

(b) a payment of a pension specified in subsection 55-5(1) (about occupational superannuation schemes) of the Income Tax Assessment Act 1997;

(c) an amount in respect of a distribution made by a unit trust that is a *resident trust for CGT purposes and a *listed widely held trust, and whose units are listed for quotation in the official list of the Australian Stock Exchange Limited, at the earliest of the following times:

(ii) when the distribution becomes due and payable;

(iii) when the distribution is made;

(d) a *net capital gain resulting solely from one or more *capital gains covered by subsection 360-100(3).

360-110 Additional categories of deductions

This section covers a deduction that you have and that relates to a payment to you from which an amount must be withheld (even if the amount is not withheld) under a provision listed in the table.

360-115 Additional categories of tax offsets

This section covers a *tax offset to which you are entitled because of a provision of the Income Tax Assessment Act 1936 listed in the table.

If the application is successful

360-120 Making the oral ruling

(1) The Commissioner makes the ruling by communicating its contents to you orally, either in person or by live 2-way conversation using a method approved by the Commissioner. The ruling is made at the time of the communication.

(2) The communication must:

(a) set out the matter ruled on; and

(b) identify the person to whom, and the *income tax law, the income year and the *oral ruling arrangement to which, the ruling relates; and

(c) indicate that the ruling is an *oral ruling; and

(d) if the correctness of the ruling depends on an assumption - set out details of the assumption; and

(e) include a registration identifier for the ruling.

(3) You are not entitled to receive a written record of the communication.

Note: However, you may be able to apply for a private ruling on the matter under Part IVAA.

(4) Neither you nor anyone else is entitled to object against the ruling under Part IVC. The ruling is not a taxation decision for the purposes of that Part.

Note: However, you may be able to apply for a private ruling on the matter under Part IVAA. A rulee who is dissatisfied with a private ruling may object against it under Part IVC.

Subdivision 360-C - When Commissioner must or can refuse the application

Table of sections

360-140 Aspects of your tax affairs that disqualify you

360-145 Other grounds on which application must or can be refused

360-150 Assumptions in making private ruling

360-155 Effect on oral ruling if provisions not complied with

360-140 Aspects of your tax affairs that disqualify you

(1) The Commissioner must not comply with your application unless he or she is satisfied that:

(a) throughout the *inquiry period you were an Australian resident; and

(b) at no time during the inquiry period did you carry on a *business; and

(c) at no time during the inquiry period were you a *withholder; and

(d) your assessable income for the inquiry period did not include an amount in respect of a *non-cash benefit.

(2) The Commissioner must not comply with your application if:

(a) your assessable income or *exempt income for the *inquiry period included an amount arising from a transaction with your *associate; or

(b) your deductions for the inquiry period included an amount you paid to your *associate; or

(c) an anti-avoidance provision applies to you in relation to the income year to which your application relates.

360-145 Other grounds on which application must or can be refused

(1) The Commissioner must not comply with your application if:

(a) there is already an *oral ruling, in respect of the same income year, on the matter sought to be ruled on; or

(b) there is already a *private ruling on the matter sought to be ruled on; or

(c) the matter sought to be ruled on has been decided for the purposes of a *Commissioner assessment; or

(d) there is being carried out a *tax audit:

(i) of which you have been informed; and

(ii) that, in the opinion of the Commissioner, will require the Commissioner to decide the matter sought to be ruled on; or

(e) the matter sought to be ruled on is the subject of an objection against a *self assessment; or

(f) you are not a *SPOR taxpayer for the income year to which the application relates, and the application is made later than 4 years after the last day allowed to you for lodging an *income tax return for that income year; or

(g) you are a *SPOR taxpayer for the income year to which the application relates, and the application is made later than 2 years after the last day allowed to you for lodging an *income tax return for that income year.

(2) The Commissioner must not comply with your application if, in his or her opinion:

(a) the application is frivolous or vexatious; or

(b) the *oral ruling arrangement to which the application relates has not been, and is not being, carried out and is not seriously contemplated by you; or

(c) you have not given sufficient information, despite a request under section 360-40, to enable the ruling to be made; or

(d) it would be unreasonable to comply, or continue to attempt to comply, having regard to the extent of the Commissioner's resources that would be required to comply.

(3) The Commissioner must not comply with your application in so far as it involves calculating an amount.

(4) The Commissioner need not comply with your application if he or she is satisfied that, had your application been for a *private ruling, he or she would not have been required to comply with it.

360-150 Assumptions in making oral ruling

If the Commissioner considers that the correctness of an *oral ruling would depend on which assumptions were made about a future event or other matter, the Commissioner may:

(a) decline to make the ruling; or

(b) make such of the assumptions as the Commissioner considers to be most appropriate.

360-155 Effect on oral ruling if provisions not complied with

(1) An *oral ruling is taken never to have been made, and never to have been communicated, if any of these provisions applied to the application for the ruling:

(a) subsection 360-140(2); or

(b) subsection 360-145(1).

(2) The validity of an *oral ruling is not affected because any other provision of this Act has not been complied with.

Subdivision 360-D - Miscellaneous

Table of sections

360-175 Application for oral ruling does not affect obligations and powers

360-180 Effect on oral ruling if tax law re-enacted

360-175 Application for oral ruling does not affect obligations and powers

The fact that there has been an application for an *oral ruling does not in the meantime affect:

(a) your obligation to lodge a return or do any other act; or

(b) the Commissioner's power to make or amend an assessment.

360-180 Effect on oral ruling if tax law re-enacted

If:

(a) the Commissioner makes an *oral ruling about an *income tax law (the old law ); and

(b) that law is re-enacted or remade (with or without modifications, and whether or not the old law is repealed);

the ruling is taken also to be an oral ruling about that law as re-enacted or remade (the new law ), but only so far as the new law expresses the same ideas as the old law.

Note: Ideas in tax laws are not necessarily different just because different forms of words are used. See:

· section 15AC of the Acts Interpretation Act 1901; and

· section 1-3 of the Income Tax Assessment Act 1997.