SECOND COMMISSIONER OF TAXATION
Mr Ali Noroozi
Inspector-General of Taxation
Level 19, 50 Bridge Street
Sydney NSW 2001
Thank you for your report on the Review of aspects of the Australian Taxation Office's administration of private binding rulings. The ATO's responses to your specific recommendations are at Attachment 1. I understand that you will include our responses under the relevant recommendation in your final report.
I note your favourable comments on our strong performance on the quality of the private rulings that were the main subject of your review, and the supportive comments in a number of submissions made to you. I also note that you consider that we need to improve the timeliness of our responses to requests for private rulings, especially those that may need to involve a number of our experts to resolve issues that are usually complex or novel. We agree and, as you are aware, are pursuing initiatives that aim to get the key people involved early to resolve the issues and work closely with the applicants as appropriate.
It is pleasing to see that you have concluded that we have implemented all of the agreed recommendations of the 2008 Review of the potential revenue bias in private binding rulings involving large complex matters.
I observe your concerns about the impact of our migration to a new IT system on the timeliness of our private rulings. We agree with you that with the introduction of any new system, especially one of this magnitude, it can be expected that it will take some time for staff to get accustomed to the new functionality and ways to use the system most effectively and efficiently. We are working to address these impacts.
In summary, of your six recommendations we agree with three in full or in principle, with two in part and on one of the recommendations we make no comment as it is directed to government. Our reasons are set out at Attachment 1.
Our major difference, as far as your findings and recommendations are concerned, relates to our Register of Private Binding Rulings (the register). We remain of the view that the key purpose of the register is integrity - that the person receiving the private ruling can verify its authenticity by reference to this register on our website. It is also a means of transparency for the private rulings we issue. We believe that it is performing this role adequately in its current form. Our concern with the 'enhancements' proposed is that they could be interpreted as moving the register beyond its intended purpose (a register for integrity and transparency of the private ruling system) to an authoritative database - a risk acknowledged when we established the register. The ATO's precedential database (the ATO legal database) is the authoritative source for information about the ATO's interpretation of the law.
Finally I would like to acknowledge the efforts of all involved in the undertaking of the review.
Second Commissioner Law