When rulings are binding on the Commissioner
357-60 When rulings are binding on the Commissioner
Subject to subsection (5), a ruling binds the Commissioner in relation to you (whether or not you are aware of the ruling) if:
the ruling applies to you; and
you rely on the ruling by acting (or omitting to act) in accordance with the ruling.
A public ruling is expressed to apply to a class of entities in relation to a particular scheme. Tim is a member of that class of entities and he is one of a number of taxpayers who enter into that scheme. The ruling applies to Tim.
Tim relies on the ruling by lodging an income tax return that is in accordance with the ruling.
Under the ruling, Tim’s deductions in relation to the scheme are worked out to be a particular amount. Because Tim has relied on the ruling, the Commissioner must use that amount in making Tim’s assessment (unless Tim stops relying on the ruling or the law is more favourable to him: see sections 357‑65 and 357‑70).
Cecelia applies for, and obtains, a private ruling that, when she makes a payment in specified circumstances, she would not have to withhold an amount under a relevant provision. Cecelia makes the payment in the circumstances specified in the ruling, so the ruling applies to her.
Cecelia relies on the ruling by not withholding an amount from the payment. The Commissioner must not apply the provision in relation to Cecelia in a way that is inconsistent with the ruling (unless Cecelia stops relying on the ruling or the law is more favourable to her: see sections 357‑65 and 357‑70).
Cathie obtains a private ruling that a type of supply she makes is GST‑free. She relies on the ruling by:
giving her customers invoices that show no GST payable on the supplies; and
lodging her GST return on the basis that the supplies are GST‑free.
The Commissioner must administer the GST law in relation to Cathie on the basis that the supplies to which the ruling relates are GST‑free. This does not apply if Cathie stops relying on the ruling, such as by issuing tax invoices that show GST payable on the supplies: see paragraph (1)(b).
A ruling about the amount of tax payable that binds the Commissioner provides protection in relation to that amount. There is no shortfall interest charge or tax shortfall penalty payable in respect of that amount as there can be no shortfall in tax payable.
A ruling about the operation of a provision would stop applying to you if the provision is repealed, or is amended to have a different effect. However, if the provision is re‑enacted and expresses the same ideas as the old provision, the ruling would still apply: see section 357‑85.
You may rely on the ruling at any time unless prevented from doing so by a time limit imposed by a *taxation law. It is not necessary to do so at the first opportunity.
GST rulings
The *GST payable on a *supply or importation is the amount worked out in accordance with a ruling (if any) that:
relates to the GST payable on the supply or importation; and
binds the Commissioner in relation to the supplier or importer.
The ruling will stop affecting the GST payable if the supplier or importer stops relying on the ruling: see paragraph (1)(b).
Subsection (3) does not apply for the purposes of an objection to the ruling under section 359‑60.
Indirect tax rulings
An *indirect tax or excise ruling (except to the extent that the ruling relates to an *excise law) binds the Commissioner in relation to:
an entity (the representative entity) that is:
the *representative member of a *GST group; or
the *joint venture operator of a *GST joint venture; or
the *representative of an *incapacitated entity; and
an entity (the member entity) that is:
a *member of the GST group; or
a *participant in the GST joint venture; or
the incapacitated entity;
if, and only if, both the representative entity and the member entity rely on the ruling by acting (or omitting to act) in accordance with the ruling.
Subsection (5) applies if:
the ruling applies to the member entity; and
the ruling relates to what would be:
a liability of the member entity to *indirect tax; or
an entitlement of the member entity to a credit (other than a *fuel tax credit) under an *indirect tax law; or
an *increasing adjustment, a *decreasing adjustment, or a luxury car tax adjustment (within the meaning of the *Luxury Car Tax Act), that the member entity has;
if the rules in the indirect tax law relating to *GST groups, *GST joint ventures or *incapacitated entities did not apply; and
because of those rules:
if that indirect tax were payable, it would be payable by the representative entity; or
if there was an entitlement to that credit, it would be an entitlement of the representative entity; or
if any entity had that adjustment, it would be an adjustment that the representative entity had.
This Act’s bill:Second reading speech
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