Office of the Chief Tax Counsel (OCTC)

Taxpayer Rulings Unit

The Taxpayer Rulings Unit provides greater certainty about the application of tax laws 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 financial arrangement 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) has recently been updated and the new version is available here under "Forms and guides".

Ruling application allocation guidelines

Introduction

Applications from taxpayers for binding rulings (private rulings, product rulings or status rulings) will be handled by:

• the Office of the Chief Tax Counsel (OCTC)
• appropriate personnel within the Service Delivery group, or
• jointly by OCTC and the Service Delivery group.

The criteria below form the basis for this allocation. This allocation is to be made on the basis of the technical issues contained within each ruling application, rather than on the basis of each application as a whole.

The allocation guidelines 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 issues within an application have been allocated to a business group for processing, it shall be that business group's responsibility to process those and they shall not be reallocated unless there are exceptional circumstances.

In exceptional circumstances, or where this is necessary or highly desirable due to relative workload demands and available resources, with the approval of the Chief Tax Counsel and the Assurance Manager (Investigations - Large Enterprises), senior managers within OCTC and Service Delivery may agree to vary the allocation of a particular application from these guidelines.

Allocation guidelines

A	Issues within applications having the following characteristics will be allocated to OCTC:
1.	Significant issues concerning the ability of the Department to rule.
2.	Raising issues where there is a significant absence of, or possible or perceived deficiency in, IRD policy.
3.	Directly challenging an existing IRD policy or technical decision (whether this is based on new case law, or legislative change, or because the applicant regards the existing policy or decision to be legally incorrect).
4.	Raising issues where there are unresolved differences of views within IRD business groups on the correct application of the legislation.
5.	Raising issues where there is significant potential deficiency in, or unintended potential application or non-application of, specific legislative provisions.
6.	Raising significant interpretation issues in relation to new legislation.
7.	Raising issues or involving arrangements, having significant national implications, a wide precedential effect, or affecting an industry group.
8.	Raising issues or an arrangement that are the same as, or similar to issues already being handled by the OCTC.
9.	Issues within product rulings that are not related to one or more private ruling applications (subject to guideline 3. in part C below).
10.	Raising legal or factual issues that are particularly sensitive, of significant public or political interest, or otherwise controversial.
11.	Raising issues of the interpretation of an anti-avoidance provision where those issues or equivalent arrangements have not previously been ruled upon.
B	Applications for a substantive ruling on sections GC 6 to GC 14 of the Income Tax Act 2007 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	Issues within 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.	Issues within 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 issues within ruling applications (ie, not covered by the above criteria) will be allocated to, and handled by, the Service Delivery group.

Applications for special financial arrangement determinations are allocated to OCTC.

 

Date published: 27 Oct 2011

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