Notice of Withdrawal of Rulings 12 December 2023

Overview

The Taxation Administration Act 1953, enacted by the Commonwealth Parliament, provides a framework for the administration of taxation laws in Australia. In this context, the Act empowers the Commissioner of Taxation to issue rulings that clarify the application of tax laws, providing certainty to taxpayers and ensuring consistent application of the law. The withdrawal of Taxation Ruling TR 95/60, effective from 13 December 2023, is an example of the Commissioner exercising this authority to update and refine the guidance provided to taxpayers. The withdrawal aims to address evolving tax practices and legislative changes, ensuring the rulings remain relevant and accurate. The new draft Taxation Ruling TR 2023/D4, which will be issued on the same date, is intended to replace the withdrawn ruling, offering updated guidance on the deductibility of financial advice fees for individuals not carrying on a business.

Scope and Application

The Commissioner of Taxation has issued a notice under the Taxation Administration Act 1953 withdrawing Taxation Ruling TD 95/60, effective from 13 December 2023. This withdrawal applies to all taxpayers who were relying on the ruling, specifically those who are not carrying on an investment business and seeking to claim deductions for fees paid for obtaining investment advice under section 8-1 of the Income Tax Assessment Act 1997. The ruling will be replaced by draft Taxation Ruling TR 2023/D4, which is expected to be issued on the same date. The withdrawal of the ruling and the issuance of the draft ruling apply across the Commonwealth of Australia, affecting any entity or individual subject to the income tax provisions of the ITAA 1997. The scope of this legislative action does not specify any exclusions or exemptions but mandates adherence to the new draft ruling once it is issued. This change extends the application of the Act through the replacement ruling, which will provide updated guidance on the deductibility of financial advice fees for non-business taxpayers.

Key Provisions

Section 358-20(1) of Schedule 1 to the Taxation Administration Act 1953 provides the Commissioner of Taxation with the authority to withdraw public rulings by way of a notifiable instrument. In this instance, the Commissioner has exercised this authority to withdraw Taxation Ruling (TR) 95/60, which addressed the deductibility of fees paid for obtaining investment advice for taxpayers not engaged in an investment business. This ruling is being replaced by the draft Taxation Ruling TR 2023/D4, which will provide updated guidance on the same subject matter, effective from 13 December 2023. The withdrawal of TR 95/60 imposes specific obligations on taxpayers who have relied on this ruling for their tax positions. As of 13 December 2023, taxpayers are no longer permitted to rely on TR 95/60 for making deductions related to fees for investment advice. Instead, they must refer to TR 2023/D4, which will be issued on the same date and will provide the updated guidance and rules applicable from that date. Taxpayers should review the new ruling to ensure their claims for deductions are in compliance with the revised provisions. Failure to comply with the updated taxation rulings may result in various consequences. If a taxpayer's claim for a deduction is not substantiated by the correct ruling or by other relevant provisions of the Income Tax Assessment Act 1997 (ITAA 1997), the Commissioner may disallow the deduction. This could lead to an adjustment in the taxpayer’s assessable income, resulting in additional tax payable. While the notifiable instrument itself does not specify penalties for non-compliance, general tax law provisions apply, and penalties for incorrect claims can include fines and interest on any unpaid tax. In summary, the withdrawal of TR 95/60 and its replacement by TR 2023/D4 necessitates that taxpayers adjust their practices to align with the new ruling. They must ensure their claims for deductions are supported by the correct and current taxation rulings to avoid potential disallowance of deductions and the associated tax consequences. The Commissioner's use of a notifiable instrument under section 358-20(1) ensures that all affected parties are duly informed of these changes.