ATO, Compliance

Private tax ruling guidance released

ATO private ruling

The ATO has outlined the steps needed to apply for a private ruing but emphasised accurate and complete data was critical for it to properly assess any ruling request.

The ATO has released new guidance for people applying for a private ruling detailing the application process and information it will require to make a ruling stressing that poorly stated or inaccurate information will hamper its decision making.

The guidance, contained in QC40433, stated the easiest way to apply for a private ruling was through a range of application forms adapted for different purposes but that applicants could also send a letter to the ATO providing the same valid and complete information as that requested in the application forms.

This information must include facts describing the situation, arguments and references in support of a request for a ruling, relevant valuations, supporting documents and any specific questions for the regulator, and must be consistent and complete.

“You must give us a description of all the facts relevant to your scheme or circumstance. Include details of any previous rulings you received on your issue,” the ATO said.

“Your private ruling won’t apply if there is any substantial difference between what you describe in your private ruling [and] actually do.

“If the scheme you describe is only a proposal, the facts must still be reasonably certain. We can’t issue private rulings about hypothetical situations.”

The ATO highlighted that applicants who are not a tax agent or tax professional did not have to supply arguments and references but those who were had to show the results of research undertaken and include an opinion about how the law applies to the issue related to the private ruling request.

Individuals seeking further information from the regulator were told to structure questions clearly so it could identify issues ‘accurately and fully’ but noted only tax professionals are required to reference specific provisions of law when seeking a ruling.

The ATO added both tax professionals and individuals/sole traders or businesses with an Australian business number can lodge an application using online business services while fax and post lodgements are available for all other applicants.

The regulator acknowledged it is experiencing high volumes of application for certain private ruling topics meaning there may be a delay in contacting applicant in regards to a ruling request.

Further, it highlighted private ruling applications should be lodged by themselves but should not delay the lodgement of other items such as tax returns.

In a separate update the ATO also reminded SMSF trustees and members to engage in good record keeping to prevent increased compliance costs at the end of the financial year.

“There are benefits when you understand what records you need to keep and implement good record keeping habits. These can include reduced audit and administration costs and a more streamlined process when lodging your self-managed super fund annual return, it’s also a legal requirement to do so,” the regulator explained.

“If you choose not to keep required records, then you run the risk of receiving administrative penalties which are personally payable by each individual trustee or the corporate trustee of the fund.”

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