Taxation Administration Regulations (Amendment) 1992 No. 317
EXPLANATORY STATEMENT
Statutory Rules 1992 No. 317
ISSUED BY THE AUTHORITY OF THE TREASURER
Taxation Administration Act 195
Taxation Administration Regulations (Amendment)
These regulations will amend the Taxation Administration Regulations as a consequence of an amendment made to the Taxation Administration Act 1953 (the Act).
The Act was amended by the Taxation Laws Amendment (Self Assessment) Act 1992 to, among other things, allow a person to apply to the Commissioner of Taxation for a private ruling about how the tax laws apply to a particular arrangement in relation to a year of income. When the Commissioner makes a private ruling, subsection 14ZAR(1) of the Act requires that a written notice of the private ruling be prepared (paragraph 14ZAR(1)(a)) and that the written notice be served on the applicant (paragraph 14ZAR(1)(b)).
New regulation 18A being inserted by these regulations prescribes how notice of a private ruling may be served on the person who applied for the ruling. Under subregulation 18A(1), a private ruling may be served on a person by delivering it to the person or by leaving it at, or posting it to, the person's address for service of the ruling.
A person's address for service is generally the address nominated in the application for the private ruling as the place where the ruling is to be sent (paragraph 18A(2)(a)). But an applicant may nominate another address for service at a later time, for instance, where the person changes a residential or business address (paragraph 18A(2)(b)).
Subregulation 18A(3) provides that a private ruling sent by prepaid post is taken to have been served on the applicant when it would have arrived in the ordinary course of the post, unless proved otherwise. The subregulation will have a practical purpose, for instance, if there is a dispute about whether an objection against a private ruling has been lodged in time. This is because one of the two alternative deadlines for lodging such an objection is 60 days from the day the private ruling was made (paragraph 14ZW(1A)(a) of the Act), and a private ruling is made when the notice of it is served on the applicant (section 14ZAT of the Act). Subregulation 18A(3) will also have a practical effect in the application of section 226M of the Income Tax Assessment Act 1936, which imposes a penalty in respect of a tax shortfall in an assessment where the shortfall was caused by a taxpayer failing to follow a private ruling given by the Commissioner. The penalty will only apply if the ruling was made before the taxpayer, when self assessing, treated the law as applying in a different way.
Overview
The Taxation Administration Regulations (Amendment) 1992 No. 317 was issued by the authority of the Treasurer and amends the Taxation Administration Regulations as a consequence of an amendment made to the Taxation Administration Act 1953. This amendment was introduced to address the need for clarity and formalisation in the process of applying for and receiving private rulings from the Commissioner of Taxation regarding the application of tax laws to particular arrangements. The objective of these regulations is to outline the methods by which notice of a private ruling can be served on the applicant, ensuring both parties are aware of the communication process. Regulation 18A, inserted by these amendments, specifies that a private ruling can be served by delivering it to the applicant, leaving it at their address for service, or posting it to that address. This regulation also addresses the presumption of service when a ruling is sent by prepaid post and its implications for the timeliness of objections and penalties under the Income Tax Assessment Act 1936.
Scope and Application
The Taxation Administration Regulations (Amendment) 1992 No. 317 amend the Taxation Administration Regulations in response to changes introduced by the Taxation Laws Amendment (Self Assessment) Act 1992 to the Taxation Administration Act 1953. This amendment pertains to the process of obtaining a private ruling from the Commissioner of Taxation, allowing a person to seek clarification on how tax laws apply to a particular arrangement for a year of income. Regulation 18A, introduced by these amendments, dictates the methods for serving a notice of a private ruling, which can be either delivered to the applicant, left at, or posted to their address for service. The address for service is typically the one nominated in the application for the ruling but can be changed later. If the ruling is sent by prepaid post, it is considered served when it would have arrived in the ordinary course of post, unless proven otherwise. This stipulation is crucial for resolving disputes regarding timely objections against private rulings and for applying penalties under the Income Tax Assessment Act 1936 for tax shortfalls due to misinterpretation of a private ruling.
Key Provisions
The Taxation Administration Regulations (Amendment) 1992 No. 317 introduces a new regulation, 18A, which specifies the manner in which notice of a private ruling can be served on the person who requested the ruling (subsection 18A(1)). This is a direct consequence of the amendment to the Taxation Administration Act 1953 (the Act) made by the Taxation Laws Amendment (Self Assessment) Act 1992. Under the new regulation, a private ruling can be served either by delivering it directly to the person, leaving it at their address, or posting it to their designated address for service (subregulation 18A(1)). The address for service is typically the one provided in the application for the private ruling, although it can be changed subsequently if the applicant's residential or business address changes (subregulation 18A(2)).
These regulations impose specific obligations on both the Commissioner of Taxation and the taxpayer. For the Commissioner, the key obligation is to ensure that the notice of the private ruling is properly served on the applicant, adhering to the methods outlined in subregulation 18A(1). This includes verifying the address for service and using the appropriate method of delivery or post. For the taxpayer, the obligation is to provide a valid address for service in their application and to update this address if there are any changes. This ensures that the communication regarding the private ruling reaches them effectively and in a timely manner.
The regulations also address potential consequences for non-compliance with the service of notice requirements. Although the regulations themselves do not explicitly state penalties, the practical implications of failing to properly serve a private ruling can be significant. For instance, if a taxpayer objects to a private ruling and the objection is not lodged within the stipulated timeframe of 60 days from the service of the ruling (paragraph 14ZW(1A)(a) of the Act), the objection may be deemed untimely. Furthermore, if the private ruling was not served properly and a tax shortfall occurs due to the taxpayer misinterpreting the ruling, they may face penalties under section 226M of the Income Tax Assessment Act 1936. This penalty applies if the shortfall was due to the taxpayer's failure to follow the private ruling given by the Commissioner, and the ruling was made before the taxpayer treated the law differently in their self-assessment. The proper service of the private ruling is therefore crucial to avoid these potential consequences.