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Review of the potential revenue bias in private binding rulings involving large complex matters

A report to the Assistant Treasurer

February 2008

Table of Contents


Telephone: (02) 8239 2111
Facsimile: (02) 8239 2100

Australian Government - Inspector-General of Taxation crest

Level 19, 50 Bridge Street
Sydney NSW 2000
GPO Box 551
Sydney NSW 2001

6 February 2008

The Hon Chris Bowen MP
Assistant Treasurer
Parliament House
Canberra ACT 2600

Dear Minister

I am pleased to present to you my report on findings and recommendations in respect of the review of the potential revenue bias in private binding rulings (PBRs) involving large complex matters. The report has been prepared under section 10 of the Inspector-General of Taxation Act 2003 (the Act). The review was undertaken in response to a request made by your predecessor. The review was conducted pursuant to section 8 of the Act.

The review found that there was no evidence of undue revenue bias in large complex PBRs. Based on a representative survey, however, around 70 per cent of large business PBR applicants perceived the Tax Office to have a revenue bias in its PBRs. A major cause of these perceptions was identified as being a lack of transparency — taxpayers observed unexplained Tax Office behaviours and in the absence of cogent explanations interpreted those behaviours as being motivated by a revenue bias.

I provided the Commissioner of Taxation with opportunities to make a submission in relation to this report. The Commissioner’s submission is set out in one of the appendices to the report.

The Tax Office has welcomed the finding that there was no evidence of undue revenue bias; it has accepted that perceptions of bias exist and that it will need to improve transparency to remove them. The Tax Office has agreed fully with 6 of the 10 recommendations in the report and has partly agreed with the rest.

I offer my thanks to the support and contribution of professional bodies, business groups and individuals to this review. The willingness of many to provide their time in preparing submissions and discussing issues with myself and my staff is greatly appreciated.

Yours sincerely

[SIGNED]

Rick Matthews PSM
Acting Inspector-General of Taxation


Review team:

David Pengilley, Senior Adviser


© Commonwealth of Australia 2008

ISBN 0 642 74426 2

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