An entity may obtain a GST private ruling to provide certainty about how a GST provision applies to that entity’s particular circumstances. Before making an application for a GST private ruling, an entity should consider the following issues.
Application must be in approved form
The application must be made in the approved form. The application must provide a full and true disclosure of the material facts pertaining to the matter sought to be ruled. The ATO encourages applicants to include a summary of the research undertaken and an analysis of the technical issues. This is preferable to expecting the ATO to do the research and coming up with its own – potentially different – answer. An application that does not properly describe the matter to be ruled on, and/or does not provide a full and true disclosure of the material facts, will render any subsequent ruling non-binding on the Tax Commissioner.
If the ATO considers that further information from the applicant is required to make a private ruling, the Commissioner is obliged to request it. Note that the Commissioner is empowered to take into account any relevant information provided by a third party, providing the Commissioner informs the applicant what the information is and that it is intended to be taken into account, and that the Commissioner gives the applicant a “reasonable opportunity to respond” before making the ruling.
If the Commissioner forms the view that the correctness of a private ruling depends on assumptions about a future event or other matter, the Commissioner can make those assumptions (or decline to rule).
When can the Commissioner decline to rule?
Subject to several qualifications, the Commissioner is obliged to make a GST private ruling if an entity applies for one. The exceptions to this obligation are as follows:
- If making the ruling would prejudice or unduly restrict the administration of a tax law, the Commissioner may decline to make it.
- If the ATO has already considered the matter sought to be ruled on, eg during an audit, the Commissioner can decline to make the ruling.
- If the matter sought to be ruled on relates to how the Commissioner would exercise a discretion and the Commissioner either exercises the discretion or decides not to, the Commissioner can decline to make the ruling. The ATO translates this into simply exercising the discretion in response to the application, if such a response is warranted.
In addition to the above circumstances, there are other powers afforded to the Commissioner in declining to make a private ruling. If the Commissioner requests further information from an applicant and it is not supplied “within a reasonable time”, the Commissioner then has the power to decline to make the ruling. There is no definition of what constitutes a “reasonable time”, but the ATO administers this rule on the basis that 28 days is sufficient (subject to an extension).
Lastly, the Commissioner can also decline to make a private ruling if its correctness would depend on the making of an assumption about a future event or some other matter and the Commissioner considers it inappropriate to make the assumption.
Where a private ruling is pending for over 60 days
Where the Commissioner has not made (and has not declined to make) a private ruling within 60 days of the ruling application, and an event that extends the 60-day period (eg a request for further information) has not occurred, the applicant can issue a written notice requiring the private ruling to be made. If the Commissioner fails to make the private ruling within 30 days of receiving the applicant’s notice (and has not declined to make the ruling), the applicant has objection rights under Pt IVC of the Taxation Administration Act 1953.
A draft private ruling must be lodged with the objection. On receiving the applicant’s objection, together with the draft private ruling, the Commissioner must either make a ruling in the same terms as the draft ruling or make a different private ruling. If the Commissioner takes neither action within 60 days of the objection being lodged, then the Commissioner is taken to have disallowed the objection and the ordinary rules for review and/or appeal apply.
If an application for a GST private ruling requires a valuation to be made, the Commissioner is entitled to engage the services of a third-party valuer to perform this task and on-charge the cost to the applicant. This includes engaging a valuer to review a valuation supplied with the application. Note that the Commissioner may decline to make a private ruling if the applicant refuses to pay an amount charged for a valuation.