If you are unsure about the tax treatment of various past or future receipts or expenditure, you may apply to the ATO for a (written) An opinion given by the Australian Taxation Office to an individual taxpayer. The ruling is binding on the ATO, so if the taxpayer acts according to the opinion, the ATO cannot take the taxpayer to court if the opinion later turns out to be wrong. or an oral ruling. You are entitled to rely on the ruling; the ruling binds the ATO to the opinion expressed. However, you are not entitled to rely on a private ruling that has been issued to a different taxpayer.
When faced with an unfavourable private ruling, you should not ignore it and treat the receipt or expenditure differently to how it is treated in the ruling. To do so may expose you to penalties. You may The review of the decision of a lower court by a higher court. If an appeal is successful, the higher court can change the lower court’s decision. an unfavourable private ruling to the Administrative Appeals A body set up to hear and decide disputes, usually with less formality and less strict rules of evidence than in a court proceeding. (AAT) or the Federal An independent body that hears legal claims brought by parties and decides between them. Serious cases are heard by a judge and jury, or just a judge. Less-serious cases are heard by a magistrate..
Oral and private rulings are provided free of (1) A statement giving the details of a crime an accused person is claimed to have committed. (2) A personal property security. (3) A judge’s directions to a jury at the end of a case., but private rulings can take time to be issued by the ATO. Essentially, they provide a cheap alternative to advice from legal professionals. However, there are advantages and disadvantages to the binding nature of such rulings both on you and the ATO.
If you have simple tax affairs and you have a simple tax inquiry, you can apply to the Tax Commissioner for an oral ruling, either in person at an ATO branch office or over the phone. If your inquiry is more complex, or you are dissatisfied with an oral ruling, you may apply for a (written) private ruling. An application form is available from the ATO’s website.