ATO rules in public interest

THE Australian Taxation Office has become increasingly vigilant in its role of implementing taxation law.

And it is not just in enforcement that the ATO has been on the ball. Explaining the myriad taxes, including the Goods and Services Tax and the new simplified tax system, is also high on the ATO’s agenda.

So much so, in fact, that various quarters of the community, including the accounting fraternity, are now speaking of information overload.

Public rulings, GST-specific private rulings, GST-written general advice, legislative determinations, case decision summaries, taxpayer alerts, case law and more – the ATO continues to spit out documents that explain the unexplained, re-explain the explained or define the re-explained.

And where accountants are still confused, the ATO has come up with a solution to indicate how these explanations are to be actually applied.

Last month, for example, more than two years after the GST was introduced, the ATO was still seeking to explain – by way of an interpretive decision – the way the GST is applied to walking sticks, another to how it applies to crutches and yet another to walking frames.

On August 23, 59 such decisions were handed out to the public, accountants and to ATO employees confused by the rulings, determinations and other literature applying tax to various aspects of a taxpayer’s life. A week later, an additional 31 were provided.

And this was just a normal week for the ATO. Interpreting the interpreted continues to demand more and more resources. In 2001, the tax office published 805 interpretive decisions. In the current calendar year the number is set to go beyond 1,000, with 895 individual interpretations already made to date.

Then there are the practice statements, ATO guidelines and case decision summaries.

Perhaps to remove the confusion over how the ATO applies legislation, and to make ATO employees’ life easier, a “decision tree for written responses to taxpayer requests for advice” has been drawn up.

Found in PS 2001/4 (short form for practice statement number four, compiled in 2001), it is hoped the chain of inter-linked information will provide a simple method for deciding when a public, private, binding advice or any other kind of help is warranted by the ATO.

The tax office may decide to issue a public ruling if it would be helpful to the general community and ATO staff. Public rulings may be taxation, specific goods and services tax rulings, product rulings or class rulings.

An example of a class ruling includes cases where an employer seeks advice about the tax con-sequences of a bona fide redundancy plan for a class of employees.

Such a ruling applies where a company seeks advice about the tax consequences for its shareholders with regard to a company restructure, a split or consolidation of its shares, or any other proposed transaction of the company affecting the tax affairs of its shareholders.

It is also applied where a public company seeks advice about the application of the scrip for scrip roll-over provisions to its shareholders; and in instances where a Commonwealth, State or Territory government seeks advice about a proposed transaction, for example, an industry restructure that has taxation consequences for participants in that industry.