Office of the Chief Tax Counsel (OCTC)
Taxpayer Rulings Unit
The Taxpayer Rulings Unit provides greater certainty about the application of tax law and fosters higher levels of compliance with tax legislation by:
- providing rulings on transactions, which allow taxpayers to enter into transactions with confidence as to the tax outcomes, and
- applying an impartial and rigorous analysis of how the tax laws apply to an arrangement.
Taxpayer Rulings' service is a fee-based service provided by the Commissioner. Taxpayer Rulings issues private, product and status rulings, which are the Commissioner's interpretations of the tax laws, and taxpayer-specific statutory determinations (eg, accrual determinations), which are formally binding on the Commissioner.
It is important that binding rulings, which bind the Commissioner for the period of their application, are technically correct and in accordance with the tax Acts and relevant case law. Taxpayer Rulings' staff, who are usually qualified solicitors, must thoroughly research the issues involved in the ruling application before a draft is prepared.
Drafts of private and product rulings are then discussed with the applicant to ensure that they correctly describe the arrangement on which the ruling has been requested.
Guide to binding rulings
Our Guide to binding rulings (IR715) provides comprehensive information on:
- what binding rulings are
- the different types of binding rulings available, for example, private, product, public and status rulings, and
- what you need to do to apply for a binding ruling.
Ruling Application Allocation Guidelines
Introduction
Applications from taxpayers for binding rulings (private rulings, product rulings or status rulings) will be handled by either the Office of the Chief Tax Counsel (OCTC) or appropriate personnel within the Service Delivery group. The criteria below form the basis for this allocation. They generally reflect the fact that OCTC is the final point of technical decision-making for the Department (particularly on matters that are complex or have a high level of uncertainty) and the business unit ultimately responsible under the escalation process for resolving internal inconsistencies on the correct application of the legislation.
These criteria are only for initial allocation purposes. It is possible that some of the matters referred to may only become apparent during the actual processing of the ruling application. However, once the application has been allocated to a business group for processing, it shall be that business group's responsibility to process that application and it shall not be reallocated.
| A | Applications having the following characteristics will be allocated to OCTC: |
|---|---|
| 1. | Raising issues where there is a significant absence of, or possible or perceived deficiency in, IRD policy. |
| 2. | Directly challenging existing IRD policy (whether this is based on new case law, or legislative change, or because the applicant regards the existing policy to be incorrect). |
| 3. | Raising issues where there are unresolved differences of views within IRD business groups on the correct application of the legislation. |
| 4. | Raising issues where there is significant potential deficiency in, or unintended potential application or non-application of, specific legislative provisions. |
| 5. | Raising significant interpretation issues in relation to new legislation. |
| 6. | Raising issues or involving arrangements, having significant national implications, a wide precedential effect, or affecting an industry group. |
| 7. | Raising issues or an arrangement that are the same as, or similar to another application already being handled by the OCTC. |
| 8. | Product rulings that are not related to one or more private ruling applications (subject to guideline 3. in part C below). |
| 9. | Raising legal or factual issues that are particularly sensitive, of significant public or political interest, or otherwise controversial. |
| 10. | Raising issues of the interpretation of anti-avoidance provision where those issues or equivalent arrangements have not previously been ruled upon. |
| B | Applications for a substantive ruling on section FB 2 or section GD 13 of the Income Tax Act 2004, or for Advance Pricing Agreements (APAs) by way of binding ruling, will be allocated to, and handled by, the International Audit Unit of Service Delivery to the extent that they do not involve ruling on interpretative questions regarding the meaning of the statutory language. |
| C | Applications having the following characteristics may be allocated to either OCTC or Service Delivery according to the particular nature of the issues or arrangement, the relative expertise or experience of personnel in the group, and/or available resources: |
| 1. | Involving complex factual and/or technical interpretative issues. |
| 2. | Raising issues regarding complex or specialised legislative provisions. |
| 3. | Product rulings where the issues or equivalent arrangements have previously been ruled on. |
| 4. | Raising issues or facts that are the same as, or equivalent to, those considered previously by the group. |
| D | Other ruling applications (ie, not covered by the above criteria) will be allocated to, and handled by, the Service Delivery group. |
Where a ruling application has been allocated to the Service Delivery group according to the guidelines above, the Senior Tax Counsel (Taxpayer Rulings Unit) will be required to approve, and consult with the Chief Tax Counsel where appropriate, such rulings where the ruling is likely to have significant precedential effect either by:
- potentially creating a market product (as was the case for initial passive investment fund rulings), or
- taking a view where the Commissioner previously did not hold a view.
In such cases, a senior level technical sign off in the Service Delivery group will be required before the matter is referred to the Senior Tax Counsel for approval.
Date published: 11 Oct 2006
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