General – Should we apply for an ATO Class Ruling?

ATO/General, Public
Author: Steve Griffiths
7 Sep 2018

FBT, GST and other tax issues can be complex and can cause confusion about compliance requirements.

We previously published an article discussing the use of Private Rulings to address this uncertainty.

Sometimes, specific issues can affect a group of taxpayers. Rather than each individual taxpayer applying for their own Private Ruling, the group may prefer to apply for a Class Ruling.

Unlike Private Rulings, Class Rulings are a form of public ruling. Public rulings are binding, so all parties will be bound by the ruling. Class Rulings disclose the name of the parties to which the ruling applies and a description of any agreements, deeds and transactions that are relevant to the ruling. Express consent needs to be obtained from all parties that will be named in the Class Ruling. A Private Ruling would be preferable for taxpayers that would like to keep these details private.

It is important to remember that Class Rulings are binding. However, you can ask to withdraw your Class Ruling application at any time before it is published. Also, the ATO will send you a draft ruling that needs to be approved before it can be published and relied upon by the parties involved.

Class Rulings explain the application of tax law to a scheme that applies to a specific group of taxpayers. Seeking a Class Ruling can be useful in the following scenarios:

  • State or territory councils seeking advice on the tax treatment of council fees and charges.
  • Employers seeking advice on the tax consequences of schemes that relate to a particular class of employee. Schemes may include redundancy plans and share acquisition plans.
  • Companies seeking advice on the tax implications for shareholders of restructures, share consolidations or share splits.

In summary:

Advantages

  • It can be more cost efficient for a group of taxpayers to apply for a Class Ruling rather than each individual taxpayer applying for a Private Ruling.
  • A favourable ruling provides certainty to all parties of the Class Ruling.
  • Class Ruling applications can be withdrawn at any time before publication.
  • A Class Ruling will not be published unless the applicant approves the draft ruling provided by the ATO. The Class Ruling cannot be relied upon by the parties involved unless it is published.

Disadvantages

  • Class Rulings are public. Information including the names of parties, details of the scheme including agreements, deeds and transaction will be published.
  • Class Rulings are binding, even if the result is unfavourable.

Comments and Examples

While published Class Rulings can only be relied on by the specific parties (or class of taxpayers) referred to in the ruling, they can also be a useful tool to other similar taxpayers. While these other taxpayers may not technically be able to rely on the Class Ruling, such rulings would still provide useful guidance to such taxpayers.

Below we have included a brief list of some Class Rulings that have been issued, and due to the nature of the content of the ruling or the class of taxpayers these may be of general interest and guidance to TaxEd members.

CR 2015/67 – Goods and services tax: GST treatment of waste management services supplied by NSW councils

This Class Ruling applies to all councils that are members of the Shires Association of NSW and Local Government Association of NSW.

CR 2010/24 – Income tax: early retirement scheme – Sunshine Coast Regional Council

This Class Ruling applies to the employees of Sunshine Coast Regional Council receiving an early retirement scheme payment.

CR 2013/1 – Goods and services tax: the GST treatment of rates and annual charges levied by NSW councils

This Class Ruling applies to all councils that are members of the Shires Association of NSW and Local Government Association of NSW.

CR 2013/13 – Goods and services tax: GST treatment of developer contributions and other dedications of land made to NSW councils

This Class Ruling applies to all councils that are members of the Shires Association of NSW and Local Government Association of NSW.

[Editor’s Note: If you have an issue that would benefit from a ruling and you consider the issues would be applicable to a range of similar taxpayers (e.g. councils or not-for-profits), feel free to contact TaxEd and we can advise or assist in determining whether a Class Ruling may be a viable option.]

This article provides a general summary of the subject covered as at the date it is published. It cannot be relied upon in relation to any specific instance. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use. It is not intended to be, nor should it be relied upon as, a substitute for professional advice.

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