Review into the Tax Office’s administration of public binding advice
A report to the Assistant Treasurer
7 April 2009
Table of Contents
Telephone: (02) 8239 2111
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Level 19, 50 Bridge Street
Sydney NSW 2000
GPO Box 551
Sydney NSW 2001
7 April 2009
The Hon Chris Bowen
Minister for Competition Policy and Consumer Affairs
CANBERRA ACT 2600
I am pleased to present to you my report on findings and recommendations in respect of the review of the Tax Office’s administration of public binding advice. This report has been prepared under section 10 of the Inspector-General of Taxation Act 2003 (the Act).
I have provided the Commissioner of Taxation with the opportunity to respond to the report’s findings and recommendations. The Tax Office’s response, including the relevant covering letter, is in Appendix 2 to the report. In finalising the report, I have fully considered the Tax Office’s response.
Of the four key recommendations I have made, the Tax Office has fully agreed with two, partly agreed with one and disagreed with one.
The Tax Office has agreed to issue further guidance on its ability to issue public rulings on matters such as risk management material, safe harbours, and matters involving the A New Tax System (Australian Business Number) Act 1999 (the ABN Act). It has also agreed to enhance its systems to promptly inform the community of changes it makes to Tax Office practice statements.
The key recommendation with which the Tax Office has partly agreed concerns the concept of a Tax Office ‘general administrative practice’. In this review, I have recommended that the Tax Office should acknowledge that key examples of its non-binding published advice (such as the supplement to TaxPack and the annual guidebook on rental properties) represent its ‘general administrative practice’ under the law. This acknowledgement would mean that any changes to this advice would only have a retrospective impact on taxpayers in cases where the advice has been exploited or has been the subject of tax avoidance. I consider that such an acknowledgement would increase certainty, efficiency and community confidence in the tax system.
The Tax Office has not agreed to make this acknowledgement, but has agreed to seek independent legal advice on the meaning of the term ‘general administrative practice’. This may lead to closer alignment of our respective views. The Tax Office has also agreed to issue further guidance to its staff on the meaning of this term after receiving this advice.
The Tax Office has also disagreed with my recommendation that a number of documents which are currently referred to by the Tax Office as ‘rulings’, but which are not in fact legally binding, should be identified or re-named in a way which ensures that taxpayers are not misled as to their legal status. During my review I identified 22 documents of this kind that would need to be re-named. However, the Commissioner considers that the preamble to each of these rulings adequately identifies their status and that re-naming them would cause confusion.
During the review I also made three subsidiary recommendations, all of which have been partly agreed to by the Tax Office.
I offer my thanks for the support and contribution of professional bodies and individuals to this review. Their willingness to provide their time in preparing submissions and discussing issues with myself and my staff is greatly appreciated.
Inspector-General of Taxation
© Commonwealth of Australia 2009
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