Summary of proposed amendment
Section 91E(4)(ga) is being clarified to allow the Commissioner to make a binding ruling if the arrangement is the subject of a dispute by way of notice of proposed adjustment (NOPA) but the application for the ruling relates to a different tax type from that in the NOPA. Currently the Commissioner cannot make a ruling if the application relates to an arrangement that is the subject of a NOPA. Allowing the Commissioner to make a ruling that relates to a different tax type to that being disputed will give taxpayers greater certainty.
Application date
The amendment will apply from the date of enactment.
Key features
Section 91E(4)(ga) is being amended to provide an exception to the prohibition on ruling on disputed arrangements that are the subject of a NOPA. The exception will apply if the application for the ruling relates to a different tax type from that being disputed.
Background
Under section 91E(4)(ga) the Commissioner may not make a private ruling if the application relates to an arrangement that is being disputed by way of a NOPA. This criterion was added in 1999 to clarify the policy intent that there should be no overlap between the disputes resolution process and the binding rulings regime. This is necessary to ensure that certainty for the taxpayer about the Commissioner’s position is maintained.
If a NOPA relates to only one aspect of the arrangement, the Commissioner cannot rule on other aspects which may not be related to the issue being disputed. This could occur, for example, if an arrangement has both income tax consequences and GST consequences. Even if the NOPA relates only to the GST aspects of the arrangement, the taxpayer cannot obtain a ruling in relation to the income tax aspects of the arrangement.
A further qualification on the ability to rule would therefore be necessary to ensure that the matter in dispute, and that for which the ruling was sought, were sufficiently separate.