3.1 This chapter discusses some of the main concepts and processes referred to in other chapters of the report.

Self assessment, voluntary compliance and certainty

3.2 The Australian system of self assessment relies on taxpayers' 'voluntary' compliance. Taxpayers 'self assess' by lodging returns which are accepted by the Tax Office at face value. The Tax Office subsequently verifies the accuracy of this information on the basis of its risk management framework.

3.3 This system relies on taxpayers and their advisers having a good understanding of the tax laws. It is generally thought that the more taxpayers understand their obligations, the more likely they are to comply. However, business arrangements have become increasing complex and the tax laws more comprehensive to deal with them. Business seeks to reduce its tax risks and opportunity costs through reliable tax advice. The Tax Office plays a significant role in providing advice on the interpretation and application of the tax laws in this respect. The Tax Office says that it wants to encourage big business to seek tax advice as part of its governance processes, including applying for private binding rulings (PBRs).

3.4 The PBR system is one of the formal mechanisms through which the Tax Office provides advice to taxpayers. It is the major mechanism in Australia's self assessment system to give to individual taxpayers certainty of tax treatment concerning their specific circumstances.

The PBR system aims to reduce uncertainty

3.5 The PBR system aims to reduce uncertainty in the law by providing protection to taxpayers who act in line with Tax Office binding advice.

3.6 A PBR is the Tax Office's written opinion of how it will apply the income tax laws to a rulee's completed or proposed transactions. Where the Tax Office has issued a ruling that applies to a taxpayer, the taxpayer is not liable to pay more tax than the ruling requires, even if the ruling turns out to be wrong. The Tax Office is bound by its view in the ruling where the rulee discloses all material facts in the application and implements the arrangement in accordance with the PBR. A PBR will only bind the Tax Office to the particular rulee who receives it. It does not bind the Tax Office in respect of any other taxpayer. This form of Tax Office binding advice thereby reduces applicants' risks and opportunity costs, but also limits the risk to the tax system if the ruling turns out to be wrong.

3.7 From 1992 until 2006, the PBR system was provided by Part IVAA of the Taxation Administration Act 1953 (TAA 1953). New rules governing PBRs became law from 1 January 2006 (see Division 359 of Schedule 1 to the TAA 1953). Generally, any PBRs that are made from 1 January 2006 will be covered by the new rules.

3.8 The changes to the PBR system came about as a result of the Review of Income Tax Self Assessment (the ROSA review). This review was undertaken by the Treasury on request of the then Treasurer in November 2003. Treasury was asked to examine aspects of Australia's self assessment system for income tax to determine whether the right balance was struck between protecting the rights of individual taxpayers and protecting the revenue for the benefit of the whole Australian community. Treasury publicly released its report in August 2004. As a result certain legislative and administrative changes were made, including changes to the PBR system.

3.9 The explanatory memorandum to the Tax Laws Amendment (Improvements to Self Assessment) Act (No. 2) 2005 explained the rationale for the changes to the PBR system:

3.4 Since 1992, the tax law has made certain categories of ATO advice, called rulings, binding on the ATO…

3.5 The Report recommended that the current system be expanded in scope and effectiveness to provide protection in a wider range of circumstances (Recommendation 2.1). …

3.10 Among a range of improvements, the Report recommended:

  • expanding the category of matters on which private rulings can be provided (Recommendation 2.11);
  • providing an avenue for review where an application for a private ruling has not been determined within 60 days (Recommendation 2.15);
  • allowing the Commissioner to make reasonable assumptions in dealing with a private ruling request (Recommendation 2.16);
  • allowing the Commissioner to consider information other than that supplied by the applicant in making a private ruling, provided the applicant is informed (Recommendation 2.17);
  • clarifying the rules where rulings are inconsistent (Recommendation 2.19);
  • allowing the Commissioner to take account of additional information supplied after making the private ruling application (Recommendation 2.21); and
  • allowing future trustees of a trust estate to rely on private rulings obtained by their predecessors (Recommendation 2.22).

PBR applications

3.10 An application for a PBR must be in a form approved by the Commissioner. The Tax Office provides a standard form that specifies the requirements of an application. However, the Commissioner will not insist that this form be used. All that is required is that the request be in writing and provide the necessary information, including copies of all relevant documents.

3.11 The Commissioner makes a PBR by preparing a written notice of it and serving it on the applicant. The ruling will identify the taxpayer, relevant scheme and provisions to which it relates.

3.12 The Commissioner may rely on assumptions and information not provided in the application. If the applicant provides the Tax Office with new information that indicates that the proposed arrangement will be entered into in a way that is materially different from that described in the original application, the Tax Office will treat this as a new ruling request. It will then ask the applicant to withdraw the earlier request, or the relevant parts of the earlier request.

3.13 The Tax Office will allow its officers to have pre-ruling discussions with applicants. However, it places restrictions on the indicative advice its officers can give:

8. Subject to the limited exception described in paragraph 18 below, officers should not provide indicative oral technical advice. …

18. It may be appropriate in exceptional cases, where we have not finalised our position on the interpretive issues, to provide indicative oral technical advice. However, the provision of indicative oral advice should occur only where there is:

  • a substantial and time-dependent business need;
  • a very low risk of a different view being taken;
  • appropriate documentation and transparency; and
  • involvement of appropriate Tax Office staff.

19. The provision of indicative oral technical advice which is positive (favourable) to the person is also subject to approval at the following SES levels: CoE manager or Senior Tax Counsel where there is no precedent [see paragraph 3.20 below]; and Business Line SES where there is a precedent. Furthermore, the provision of such advice is subject to the clear notification and acknowledgment that the preliminary position is not binding and is subject to further consideration.

20. Where indicative oral technical advice is provided in connection with a request for written advice, a record of the indicative advice must be attached to the TDMS case record.2

Grounds for refusal to rule

3.14 The Tax Office must comply with an application to make a ruling, subject to certain exceptions.

3.15 For rulings made before 1 January 2006, the Commissioner may decline, among other grounds, if, in the Commissioner's opinion, it would be unreasonable to comply or attempt to comply having regard to the extent of the Commissioner's resources or any other matters the Commissioner considers relevant.3

3.16 From 1 January 2006, the grounds for declining to provide a ruling were changed. Now, the Tax Office may decline, among other grounds, to make a private ruling if it considers that making the ruling would prejudice or unduly restrict the administration of a taxation law.4

3.17 The Commissioner is also not required to give a PBR if the applicant is being audited in relation to the arrangement that is the subject of the application. The Tax Office may also refuse to rule where applicants have not provided requested additional information within a certain period and after a reminder to provide that information (see Practice Statement PS LA 2003/4).

Internal Tax Office processes

3.18 Tax officials must follow the Tax Office's Provision of Advice Manual which sets out the manner in which written binding advice must be prepared and given to taxpayers.

3.19 The Tax Office says that there must be an existing Tax Office interpretation of the law — a precedential view — before a PBR can be made:

A private ruling is only provided if there is a clear ATO view of the relevant law. If there is no clear ATO view, the issue must be escalated in accordance with the usual escalation processes. The aim of the escalation process is to establish an ATO view to enable a private ruling to be given.5

3.20 A precedential Tax Office view is the settled Tax Office view of the law in relation to a particular interpretive issue that has been determined by a tax official in either the Tax Counsel Network (TCN) or the relevant Centre of Expertise (CoE). Precedential Tax Office views are set out in publicly issued rulings, publicly issued draft rulings, ATO Interpretive Decisions (ATOIDs) and other documents listed in the schedule to the Tax Office's practice statement, PS LA 2003/3. Precedential Tax Office views may only be created by the CoEs, TCN and International Tax Counsel.

3.21 An ATOID must be settled and cleared before the PBR can be issued. An ATOID must, subject to certain exceptions, be prepared for each decision on an interpretive issue for which there is no precedential Tax Office view. ATOIDs are technically cleared by the CoE area and escalated to TCN where necessary.

3.22 The Tax Office established the CoEs and the ATOID system to improve consistency in technical decision making by taking a corporate approach to the creation of precedential Tax Office view. These approaches have been effective in addressing past Australian National Audit Office criticisms of a lack of consistency in the PBR process. Where no precedential view exists as a basis for responding to a PBR application, the issue must be escalated to the CoEs.

3.23 For large business taxpayers, PBRs are considered and prepared by the Large Business and International Business Line (LB&I). The same Tax Office area that is tasked with conducting compliance activities, including audits, on the relevant taxpayer will deal with the PBR application. The Tax Office has sought to confine PBR advice work to specialist staff. However, resourcing demands may necessitate these staff becoming involved in audits from time to time. LB&I areas are currently based on the break-up of taxpayer industry segments — for example, the financial services industry or the manufacturing industry.

3.24 LB&I officers must follow the Tax Office's Practice Statement PSLA 2003/3 in dealing with interpretive issues arising in PBR applications. They must search for, identify and follow relevant precedential Tax Office views or escalate the issue.

3.25 If LB&I officers consider that the outcome would be incorrect or unintended if the precedential view was applied, the reasons for that conclusion must be documented and the matter must be escalated.

3.26 Where matters are referred to a CoE that CoE is accountable for its work including any resulting delays.6 However, LB&I officers will generally retain 'case ownership' of the PBR application while the referred issue is being considered by the CoE. 'Case ownership' includes the responsibility for:

  • management of the case including coordination where input is required from other areas of the Tax Office and follow-up where timeframes have not been met;
  • managing taxpayer relationships; and
  • authorising the advice that issues to the PBR applicant.7

3.27 Certain precedential technical issues of higher priority are escalated to the TCN for resolution. The TCN comprises the Tax Office's senior technical officers who are tasked to work, amongst other things, on 'Priority Technical Issues' (PTIs). The PTI process carves out from the mainstream technical escalation and resolution processes the highest priority technical issues, according to the Tax Office's risk management policies. PTIs generally require resolution by way of the formulation of the Tax Office view of the law, amongst other things. They may also require the need for legislative change to be communicated to the Tax Office Executive, Treasury and the Government.

3.28 Internal Tax Office processes determine whether an issue is a PTI. This includes agreement by the 'senior executive staff risk owner' (in LB&I this will normally be the Assistant Commissioner of the relevant industry segment area) and either a Deputy Chief Tax Counsel or the senior executive staff from the relevant CoE, depending on whether the matter requires the formulation of a precedential Tax Office view or not. The level of priority is determined by assessing the risk and potential consequences of the issue (including the consequences for the revenue) and the importance that the resolution of the technical issue has to the mitigation strategy for the risk.

3.29 Once a PTI is agreed as such, TCN and/or CoE resources are allocated to work on the issue. The LB&I industry segment area will remain responsible for managing the timeframes and applicant contact. A PTI is recorded on a register. This record is not normally linked to any identifiable taxpayer information, including PBR applications.

3.30 Authorising officers in Tax Office business lines must check that the precedential decision cited by the case officer is appropriate and applicable to the circumstances of the case. PBR approving officers in LB&I are senior executive staff (generally Assistant Commissioner or above) or internally professionally accredited. The Tax Office assures itself that this process is working through its technical quality review (TQR) process (see Appendix 3).

Tax Office interpretation of the law

3.31 Arriving at a precedential view of the tax law for a PBR involves the Tax Office's interpretation of the law and its application to the facts relevant to the PBR application.

3.32 Section 15AA of the Acts Interpretation Act 1901 effectively requires the Tax Office to take a purposive approach to interpretation; that is, to interpret the tax law in a way that promotes Parliament's purpose or object underlying the legislative provisions. The purposive approach to statutory interpretation is favoured by the Australian judiciary today, albeit with arguably different nuances in application. Generally, this approach seeks to interpret the law from the text of the legislation itself in the context in which the words appear with regard to the relevant extrinsic materials, where permissible — that is to confirm the ordinary meaning conveyed by the text of the provision; or to determine the meaning of the provision where the provision is ambiguous or obscure or where the ordinary meaning leads to a result that is manifestly absurd or unreasonable. However, administrative agencies must make reasoned decisions in individual cases in an environment of uncertainty and risk. Where ambiguity remains after reading the text of the law and the permissible extrinsic materials, an administrator may obtain input as widely as possible and refer to materials which would not be accepted according to the rules of statutory interpretation to obtain guidance — such as the policy developers and drafting instructors' files. There is no legal prohibition against doing so and this material may provide a pragmatic resolution of the ambiguity. However, relying on this material imports a substantial degree of legal risk. This is because if the matter were contested in court, the court would be unlikely to consider such material relevant. Also, a citizen receiving an unfavourable administrative ruling may also be misled where it believes the administrator's general assurances that it applies the purposive approach to statutory interpretation when in fact the administrator is relying on extrinsic materials which would not be considered relevant by a court.

3.33 Tax officers generally refer to the purposive approach to statutory interpretation as 'giving effect to the policy intent of the law'. This terminology can lead the Tax Office into error because it confuses an accepted process for determining legislative intent (Parliament's underlying purpose for the legislative provisions) with Government policy (as evidenced, for example, by drafting instructors' or policy developers' views on what was intended before the legislation was presented to Parliament). The Government's intended policy for legislative measures becomes irrelevant once those laws are enacted.

3.34 Under the purposive approach to statutory interpretation, the Tax Office has some scope to strain the words of the law to support a statutory construction that gives effect to the underlying purpose of the laws. A purposive interpretation is to be preferred even if a less strained interpretation is possible.8

3.35 This scope to strain the words of legislative provisions gives rise to a spectrum of interpretive tensions between the underlying purpose of legislative measures and statutory constructions that are open on a reading of the law.

3.36 The scope for straining the law to deliver an underlying purpose is generally limited by whether the interpretation is open on a reasonable reading of the words of that law. Where these limits are reached, legislative amendment is the better method to give effect to Parliament's intent. However, there are differences of opinion as to where these limits lie when applied to particular circumstances.

Implications of Tax Office interpretations

3.37 Most Tax Office precedential interpretations expressed in ATOIDs and PBRs do not have any implication other than increasing certainty in the tax system as intended.

3.38 However, while the Tax Office needs to protect its integrity as the independent administrator of the tax laws, it does not operate in a vacuum. The Tax Office operates within the framework of the Executive arm of Government and is a party to formal protocols and processes agreed with the Treasury. This framework requires the Tax Office to consider if its view has any implications such as impacts on taxpayers, revenue, administration, questions of interpretation, compliance and operational issues.

3.39 These processes enable the Tax Office to generate formal advice when it identifies significant issues that need to be drawn to the attention of the Treasury or Government, such as problems in the operation of the tax system like anomalies or unintended consequences of legislation. They enable the Tax Office to make specific recommendations to change a policy approach or law design in these circumstances.

3.40 The relevant paragraphs of the inter-agency processes state:

When Should Formal ATO Advice Be Provided? …

9. Formal advice may be generated when the ATO identifies significant issues that need to be drawn to the attention of the Treasury or Government, such as where the ATO identifies problems in the operation of the tax system like anomalies or unintended consequences of legislation. …

What should be covered in Formal ATO Advice? …

14. In cases where the ATO is making a specific recommendation to change a policy approach or law design, it is highly desirable that the ATO advice is comprehensive. In such cases the ATO will provide a full assessment of all the impacts and this advice should be expressed in the form of an Administrative Impact Statement. The Administrative Impact Statement should include the ATO's understanding of client impacts, revenue impacts and ATO administration impacts, including such things as questions of interpretation, compliance and operational issues. Usually the ATO advice will be in the form of a recommendation with a full assessment of all the administrative impacts should the recommendation not be acted upon.9

3.41 In clarifying its part in these arrangements, the Treasury states that:

In the process of designing new tax law, the protocol states that Treasury will provide the Tax Office with clear statements of the Government's policy intent. The Government determines the policy intent of its proposed legislation and this is reflected in the early stages in such material as press releases and budget statements. What Treasury provides the Tax Office with is a consolidated précis of these governmental statements placed in the relevant context and providing the appropriate background and the rationale for a policy decision.

In relation to pre-existing (that is, enacted) law, the protocol states that the enacted law itself is ultimately the statements of intent of the Parliament, and that the Tax Office has the exclusive role of determining the official interpretation of the law. In these cases, Treasury does not provide statement of policy intent, but, where matters are uncertain, may engage in dialogue with the Tax Office in terms of the implications of its view in interpreting and administering the law.10

3.42 On the surface, Treasury's views on the policy intent in relation to enacted law might be seen as very useful to the Tax Office in forming a purposive interpretation of a tax law. However, the Treasury considers that once the tax laws are enacted, there is little useful scope for Treasury officials to comment on the policy behind what Parliament enacted:

Statements by Treasury officials as to the supposed intent behind a measure are likely only to confuse the issue, especially if the view expressed could be argued to differ in any way from the expressed view of the ATO. As the enacted law is the primary statement of intent of the Parliament and, as administration and interpretation are matters for the ATO, and ultimately the Courts, Treasury officials should stay well clear of what might have been meant once Royal Assent has been granted. …

… until the ATO (or, in some cases, a Court) has officially decided on the interpretation, the processes to revisit a provision cannot usually be commenced. Governments usually don't change laws on mere speculation or for greater clarity, in non-vital situations — there are many more pressing issues that demand Parliament's attention.11

3.43 In Collector of Customs v Savage River Mines12 the Full Federal Court opined that:

Direct evidence from a public servant as to the policy of legislation is unlikely to be helpful in the process of statutory construction. It is difficult to envisage any circumstances in which such evidence could rise above the level of one person's opinion on the matter.13

3.44 In light of Treasury's position, this Federal Court dictum and section 15AB of the Acts Interpretation Act 1901 it is clear that Treasury's advice is not a legitimate extrinsic source to aid purposive interpretation and cannot be relied upon as such by the Tax Office.

Priority rulings process

3.45 From late May 2005, the Tax Office implemented an administrative system to expedite large, complex PBRs that involved the formulation of precedential Tax Office views. The reason it was implemented was:

because ruling applications that meet the specified criteria are at greater risk of being delivered outside timeframes required by the taxpayer, as they invariably require input from a range of Tax Office specialists and/or involve legal issues that do not have a precedent. Delays can have the effect that corporate Boards are unable to obtain the necessary assurance in relation to the management of the tax risk associated with significant transactions. It is appropriate, therefore, that different processes be put in place for certain categories of rulings to ensure that the Tax Office is able to deliver on our Taxpayers' Charter commitment.14

3.46 This process aims to deliver certain types of PBRs in timeframes that are consistent with the applicant's business needs. It does this by streamlining Tax Office processes, improving real-time communication between the Tax Office's and the applicant's technical experts and ensuring a sound understanding based on all relevant information and considered arguments (including the contrary positions) are obtained from the applicant at first instance.

3.47 The criteria for entry into this streamlined process are more restrictive than those for the mainstream PBR process. Amongst other things, these criteria include that the matter is time sensitive, the PBR will operate prospectively, the matter is of major commercial significance requiring consideration at corporate Board level, the tax outcome is a critical element of the transaction and complex law and facts need to be analysed.

3.48 A separate unit in the LB&I business line acts as 'the corporate Process Owner for priority PBRs'. Its' power includes the authority to marshal necessary Tax Office resources and take remedial action if delays are expected. Relevant technical experts are required to be available to work on the case until its expected completion date. These technical officers may have direct contact with the applicant's representatives.

3.49 A PBR application under this process is case-managed by a senior tax official experienced in written advice work. That case manager is responsible for managing the case to completion. That case manager will identify and engage relevant TCN and CoE officers immediately. TCN and CoE officers will work with the case manager to identify and resolve issues and will assist in determining the information required from the taxpayer.

3.50 The Case Manager must arrange a pre-lodgment meeting with the applicant's representative, TCN and CoE officers:

The purpose of a pre-lodgment meeting is to facilitate the lodgment of a valid ruling application that accurately describes the arrangement to be ruled upon and, as far as practicable, identifies all information that is likely to be required. Officers at the meeting should outline any particular areas of concern to enable these to be addressed in the proposed application. They may discuss the Tax Office's general view in relation to the relevant area of law, but should take care not to give any indication of what the Tax Office's view may be in relation to the proposed application.15

3.51 An ATOID does not need to be published before the issue of a priority PBR.

3.52 The Tax Office aims to finalise priority PBR applications within 28 days of receiving all relevant information, within 90 days of elapsed time, or as otherwise negotiated with applicants.

Objecting to a PBR and failure to make a ruling

3.53 A PBR rulee may object to their PBR in the same way an objection under Part IVC of the TAA 1953 is made against an assessment. However, a rulee may not object, amongst others, where there is an assessment for that taxpayer for the income year to which the ruling relates.

3.54 A PBR rulee may appeal against a Tax Office PBR objection decision. This appeal may be heard by the Administrative Appeals Tribunal or the Federal Court. Further appeal may be made by either party to the higher courts of appeal.

3.55 Under the new laws (for PBR applications received or rulings made after 1 January 2006), a PBR applicant may, subject to certain timeframes and procedural steps, object to the Tax Office's failure to make a ruling. The PBR applicant must lodge a draft ruling with the objection. This objection is also dealt with under Part IVC.

3.56 The table on the following page breaks up the outcomes of external review of PBR objection decisions concerning PBRs issued during the 2003-04 and 2004-05 years.

Table 1: Post-1 July 2003 external review of Tax Office PBR objection decisions
Outcome of external review of PBR objection Date at which the Tax Office issued the PBR Jurisdiction Totals
AAT Federal
Affirmed Before 1 July 2003 1 2 1 4
During 1 July 2000 - 30 June 2005 3 0 0 3
After 30 June 2005 0 1 0 1
Total affirmed 4 3 1 8
Set aside Before 1 July 2003 0 0 2 2
During 1 July 2000 - 30 June 2005 1 1 1 3
After 30 June 2005 0 0 0 0
Total set aside 1 1 3 5

Source: www.austlii.edu.au.

PBR numbers

3.57 The Tax Office received a combined total of almost 32,000 private ruling requests and written binding advice requests for the 2003–04 and 2004–05 years, with almost 26,000 of those requests being finalised during that period.16

3.58 Only around 2 per cent of these applications were large business PBR applications and within the scope of this review. Of these, over the 2003-04 and 2004-05 years around 20 per cent required the Tax Office to formulate a precedential Tax Office view. This proportion is significantly greater than for small business and individual PBR applicants.

3.59 Further break-up of the numbers is given in Appendix 3.

'Revenue bias'

3.60 Since the PBR system was first enacted in law in 1992, some in the private sector have claimed that the Tax Office's rulings have been revenue-biased.

3.61 There is no precise definition of the term 'revenue bias'. It is a generic term used to describe a range of repeated behaviours stemming from an institutionalised way of thinking. At one extreme it is asserted the mere fact that the Tax Office has a role in collecting the revenue calls into question its ability to impartially interpret the law. At the other extreme it is asserted that a revenue bias will only exist where the view taken in the PBR is wrong at law and overtly designed to impose a greater liability.

3.62 Submissions indicated four main factors, any of which purported to evidence revenue bias:

'The ATO rules in the revenue's favour where an alternate & better view would've imposed less tax'.

'The ATO refuses to rule or delays where a PBR involves a significant amount of revenue'.

'Taxpayers withdraw or do not apply for PBRs because they have no confidence in the ATO's ability to determine PBRs objectively'.

'There is no mechanism minimising a natural revenue bias inappropriately influencing technical decision making'.

Scope for revenue bias' existence

3.63 The Tax Office says that it is not aware of any systemic undue revenue bias. It asserts that processes and procedures do not reflect an undue revenue bias. However, it does consider that there is potential for an undue revenue bias to exist in 'cutting edge areas', areas where a precedent is being set and that precedent may give rise to a 'tax industry' — one such area being the finance area. But it denies that there is an undue revenue bias: views are taken to give effect to the 'policy intent' of the law and to reduce taxpayer compliance costs.17

3.64 A revenue bias may exist in 'settled' areas of the law also. However, these areas are not generally contested by the private sector in relation to the PBR system. The fertile territory for revenue bias was thought to be in novel areas. Submissions also claimed that a revenue bias was evident in many public rulings. These rulings are outside the scope of this review.

3.65 There is greater scope for a revenue bias where the Tax Office perceives significant risk to the revenue. A greater opportunity for a revenue bias also exists where either the Tax Office is considering a precedential view or the underlying purpose of the law cannot be found from publicly available materials with certainty.

Other relevant matters

3.66 Submissions that argued the existence of an undue revenue bias were generally made in the context that they perceived the Tax Office 'hitting large business harder'. In the large business area the same tax officials who audit the companies also provide their PBRs. (The Tax Office has sought to confine PBR advice work to specialist staff. However, resourcing demands may necessitate these staff becoming involved in audits from time to time.) In 2004-05, liabilities from active compliance activities ('audit') in the large business area increased a further $1.5 billion from previous year. In that year, audit collections from large business rose by 4 per cent. The Commissioner also raised the intensity of verification activities in its 2005-06 compliance program — for example, he sent letters to boards of companies highlighting factors to consider in weighing tax risks. Representatives of these companies publicly reacted to these letters.18

3.67 The Tax Office says that it has a responsibility to ensure that taxpayers as a whole will not forgo the amounts intended to be payable under law. This is because the Tax Office is bound by the PBR and cannot later retract a view expressed in it on assessment. The Tax Office also considers that it must be consistent in its technical views or else it will be criticised for inconsistency if it adopts an anti-revenue view in one PBR but then later changes its view in other like circumstances.

2 Law Administration Practice Statement, PS LA 2002/17.

3 Repealed para 14ZAN(j) of the TAA 1953.

4 Subsection 359-35(2) of Schedule 1 to the TAA 1953.

5 Para 56 of Practice Statement PS LA 2001/4.

6 Para 13.

7 Law Administration Practice Statement, PS LA 2004/4, para 9.

8 See also, the scope provided by the general administration powers under the tax laws to correct practical or unintended consequences, D'Ascenzo, 'The Way Forward — Some Trans Tasman Comparisons, New Zealand Inland Revenue Department Strategic Planning Forum', Speech given by the Second Commissioner of Taxation, Australian Taxation Office, 25 March 2003; see also Treasury's comments that the Commissioner's discretion is broad enough to make judgments on matters not spelt out in statutes, ROSA report, pp 72-73.

9 Law Administration Practice Statement, PS CM 2003/14, 9 May 2003.

10 Treasury correspondence to Inspector-General of Taxation, 1 November 2006.

11 McCullough, P, General Manager, Individuals and Entities Tax Division, The Treasury, Address To 1st National Consolidation Symposium, 3-4 February 2003.

12 (1988) 79 ALR 258 at 263.

13 As quoted in Pearce, 'Statutory Interpretation in Australia', Butterworths, 2001, 5th Ed. para 3.17.

14 Law Administration Practice Statement, PS LA 2005/10, para 23.

15 Law Administration Practice Statement, PS LA 2005/10, para 15.

16 Table 1.1 in the Commissioner of Taxation's Annual Report 2003–04 and Annual Report 2004–05.

17 See for example, Australian Taxation Office, Large Business Tax Compliance 2006, Canberra, 2006, p 10.

18 See for example, newspaper articles in the Australian Financial Review, 15 April 2004, Buffini, 'Directors slam Tax Office over tax planning pressure', p. 1 and Evans, 'Directors leery of tax missive', p 63; see also Richards, 'Think of anti-tax avoidance implications, Tax Office tells boards of directors', Law Society Journal May 2005, p 38.