If you are unsure about the tax treatment of various past or future receipts or expenditure, you may apply to the Australian Taxation Office (ATO) for a (written) private ruling 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 appeal an unfavourable private ruling to the Administrative Appeals Tribunal (AAT) or the Federal Court of Australia.
Oral and private rulings are provided free of charge, 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.