New Zealand

Types of binding rulings

A4.1 New Zealand's binding rulings system was introduced in 1995.

A4.2 The Inland Revenue Department (IRD) can issue three types of binding rulings on the interpretation of tax laws: public rulings, private rulings and product rulings. Additionally the IRD will issue binding status rulings to taxpayers who have applied for and obtained private or product rulings and who require certainty on the effects of legislative change to their ruling(s).

A4.3 The legislative basis for all these types of rulings is sections 91A-91J of the Tax Administration Act 1994.

A4.4 The IRD charges fees for private, product and status rulings.

A4.5 Binding private rulings can be on proposed, current and/or completed arrangements. However, proposed arrangements must be at least 'seriously contemplated' by the parties involved.

A4.6 Private rulings are not published, even in a sanitised form. However, public and product rulings are published in the IRD's Tax Information Bulletin. This bulletin is available on the IRD's website.

A4.7 Binding private rulings are not disputable decisions that can be challenged through the IRD's dispute resolution process.

A4.8 The IRD cannot issue binding rulings on matters involving the IRD's rights or obligations to exercise powers regarding the administration of the tax system, that is, it cannot issue binding rulings on matters involving the imposition or remission of penalties or prosecution or debt recovery.

A4.9 Private rulings cannot be issued on questions of fact, or if the ruling would require the Commissioner to form an opinion as to a generally accepted accounting practice or to form an opinion as to a commercially acceptable practice.

A4.10 Public rulings are created by a Public Rulings unit which is within the Office of Chief Tax Counsel of the IRD. Draft public rulings are subject to public consultation which generally runs for a minimum of six weeks.

Binding status of public rulings

A4.11 Public rulings are legally binding on the Commissioner of Inland Revenue. This means the IRD must apply taxation law relating to the person and/or arrangement in question in accordance with the ruling, provided the taxpayer has chosen to rely on that ruling in relation to their arrangement. If a public ruling is withdrawn, the Commissioner is still bound to apply the ruling to the related arrangement provided it has been entered into prior to the date of withdrawal, either for the remainder of the period or tax year specified in the ruling, or for three years after the date stated in the notice of withdrawal.

A4.12 For this reason, it is standard practice to set the period for which a public ruling is valid as either three or five years in the first instance. Once this period is up, the issues addressed in the ruling are re-considered before the ruling is published again. After a ruling has been issued once, the IRD will consider re-issuing it for an indefinite period if the relevant law is considered 'settled' and no substantial changes had to be made when re-considering the issues.

A4.13 This means that as long as the ruling remains in force (that is, it is not withdrawn), taxpayers are protected from the effects of penalties and interest should they choose to rely on that ruling.


A4.14 The Canada Revenue Agency (CRA) issues two broad types of guidance on the interpretation of its income tax laws: guidance which is provided to specific taxpayers and guidance which is provided to the public generally.

A4.15 Guidance provided to specific taxpayers will generally take the form of either an advance income tax ruling or a technical interpretation. The income tax laws of Canada do not require the CRA to issue advance income tax rulings or interpretations.

A4.16 Guidance provided to the public consists of Interpretation Bulletins, Information Circulars, various guides, website material and a newsletter, published on an ad hoc basis, called Income Tax Technical News. The last Interpretation Bulletin was issued in 2005.

A4.17 The advance income tax ruling process has been in place since 1970 and applies when a taxpayer seeks advice on a proposed transaction. The technical interpretations process applies when a taxpayer seeks general interpretive assistance with respect to the Income Tax Act or the Income Tax Regulations.

A4.18 The CRA charges a cost recovery fee for advance income tax rulings. No fees are charged for technical interpretations.

A4.19 All advance income tax rulings are released to the public in a sanitised form. This is done via third party tax publishers who charge a subscription fee for accessing this material and produce bilingual versions.

A4.20 Publication of advance income tax rulings is done for information purposes only. Advance income tax rulings can be relied upon by other taxpayers only if the facts are identical to the proposed transactions in the advance rulings. However, similar transactions often have different facts.

A4.21 The CRA does not issue advance rulings in various situations, some of which include:

  • whether a transaction is income or capital;
  • where the transaction involves a determination of a fair market value; or
  • where the matter involves a question of fact.

A4.22 Advance income rulings are regarded as administratively binding upon the CRA. Technical interpretations are not binding on the CRA.

A4.23 Interpretation Bulletins, Information Circulars and the Income Tax Technical News do not have the force of law but can be generally relied upon to reflect the CRA's interpretation of the relevant law in force at the time of their publication.

A4.24 In Canada, if a taxpayer relies on an interpretation set out in a document published by the CRA and that interpretation is wrong, tax will be assessed but penalties and interest will generally be waived or cancelled.40


A4.25 A binding private rulings system (called an advance private rulings system) was introduced in 2006. There is no binding public rulings system, although the Inland Revenue Authority of Singapore (IRAS) publishes its general practices and treatments in the form of electronic tax guides on its website.

A4.26 The legislative basis for the advance private rulings system is section 108 and the Seventh Schedule of the Singapore Income Tax Act.

A4.27 Fees are charged for advance private rulings on a cost recovery basis.

A4.28 Advance private rulings are not published, even in a sanitised form, and are not subject to the appeal process provided in the Singapore Income Tax Act.

A4.29 The IRAS will issue private advance rulings on a wide range of tax issues for business arrangements. However, private advance rulings will not be issued where the proposed ruling involves:

  • the application of tax law which is well established;
  • issues that do not require an interpretation of the tax law;
  • a confirmation of administrative procedures;
  • a refund or waiver of penalties; or
  • issues involving tax treaty considerations.

A4.30 Advance private rulings can only be issued for proposed transactions.

A4.31 Taxpayers are required to indicate on tax returns that an advance private ruling has been obtained and whether the taxpayer has relied on the ruling in completing the return.

United States of America

A4.32 In the USA there are two broad types of guidance on the US tax code: public guidance and private guidance.

Public guidance

A4.33 Public guidance consists of regulations (issued jointly by the US Treasury and US Internal Revenue Service (IRS)) and revenue rulings, revenue procedures, notices and announcements (issued by the IRS).

A4.34 Regulations do not have the force and effect of law but are the most authoritative source for interpreting the US tax code. By law, they generally cannot operate retrospectively. Regulations are prepared cooperatively by the IRS and Treasury and are submitted to the public for comment. The courts generally uphold Treasury regulations if they are a reasonable interpretation of the tax code. This means courts give regulations a great deal of deference in interpretative matters.

A4.35 Revenue rulings, revenue procedures, notices and announcements are generally issued by the IRS without any public input.

A4.36 The IRS issues revenue rulings on interpretative matters if the issue is common to a number of taxpayers. Unlike regulations, revenue rulings can be retrospective in operation. The IRS states that it will be bound by revenue rulings. Courts will also give some weight to these rulings.

A4.37 Revenue procedures are IRS statements of the procedures that affect taxpayers under the US tax code. Two examples of matters dealt with in these statements are how to calculate certain entitlements and what constitute safe harbours in matters involving examination by IRS personnel. Substantive revenue procedures are binding on the IRS in the same manner as revenue rulings are.

A4.38 Notices and announcements by the IRS deal with a wide variety of matters including the provision of interim guidance on matters that are likely to be finalised at a later date. These documents can be binding on the IRS but these types of documents will generally state whether this is the case.

Private guidance

A4.39 In the US there are five main types of private guidance: private letter rulings issued to taxpayers, technical advice memoranda, closing agreements and other specialised documents such as advance pricing agreements and pre-filing agreements.

A4.40 Private letter rulings are issued prior to the date of lodgement of a return. Technical advice memoranda are issued after the date of lodgement of a return by the IRS's technical area in response to requests by IRS auditors. Closing agreements are agreements which resolve issues permanently and are usually entered into at the conclusion of an audit, although they can be made at any time. Advance pricing agreements resolve transfer pricing issues involving multinational companies for future years. Pre-filing agreements are agreements entered into with taxpayers prior to the lodgement of a return.

A4.41 Private letter rulings have been published by commercial publishers in a sanitised form since the late 1970s. Taxpayers must pay for them on a flat fee basis.

A4.42 Private letter rulings will not be issued on certain subject matters. These subject matters are published in annual revenue procedures.

A4.43 By law, a private letter ruling may not be relied on as precedent by other taxpayers or by IRS personnel. However, they are considered binding on the IRS in respect of the taxpayer to whom they are issued if the taxpayer has fully and accurately described the proposed transaction in the original request for ruling and carries out the transaction as described.

United Kingdom

A4.44 The United Kingdom does not have a public rulings process. However, where there has been a change of policy as the result of legislation, litigation or internal policy review the UK revenue authority, HM Revenue & Customs (HMRC) will normally publish on the internet a Revenue and Customs Brief. HMRC also provides other guidance on aspects of the tax system in the form of internet pages and printed leaflets.

A4.45 HMRC provides telephone help lines both for business and individual taxpayers to assist them in understanding and meeting their obligations. HMRC also provides written advice to taxpayers on areas of the law that are unclear. There are separate systems in place for business and non-business taxpayers. For businesses, a new process called 'non statutory clearances' has been in place since April 2008. A non-statutory clearance is written confirmation of HMRC's view of the application of tax law to a specific transaction or event.

A4.46 A taxpayer is under no obligation to act on a clearance, for example when completing their return, as it merely constitutes advice. Clearances are also not appealable (apart from where a specific appeal right exists in statute — for example certain VAT clearances may constitute a decision which is appealable under the VAT Act 1994) and are never made public. HMRC do not charge for providing a clearance.

A4.47 A clearance will only be provided where:

  • there is genuine uncertainty as to the tax treatment to which the request relates (that is, it is not covered by HMRC's published guidance);
  • (for business clearances) the transaction is of commercial significance to the taxpayer in question.

A4.48 HMRC will not issue clearances that do not meet these criteria or in the following circumstances:

  • where the clearance is an attempt at tax avoidance or evasion;
  • where the clearance is an iterative response to a previous ruling;
  • where it relates to transfer pricing or pre transaction salary sacrifice schemes and valuations.

Binding status of advice issued by HMRC

A4.49 HMRC has issued a guidance document which sets out where taxpayers can rely on information or advice provided by HMRC. The principles set out in this document do not distinguish between advice that is given in writing, provided in the form of guidance on the internet or given in person over the phone or via email. The principles of where the taxpayers can rely on the advice they have received are therefore the same for all forms of guidance and communication.

A4.50 The law that governs where taxpayers can rely on advice is administrative law (chiefly established in case law41).

A4.51 HMRC's guidance document states that its primary duty is to collect tax according to the statute. This duty may mean that it is no longer bound by advice it has given. This could occur in the following circumstances:

  • for pre-transaction advice, where the nature of the transaction changes in a way that has a material impact on the transaction as a whole;
  • where the taxpayer provides incorrect or incomplete information;
  • where a court or tribunal changes the prevailing interpretation of the law and the taxpayer's liability to tax has not been finalised;
  • where the relevant statutory law changes.

A4.52 The guidance statement also states that if information or advice provided by HMRC is incorrect in law, HMRC will be bound by such advice provided that it is clear, unequivocal and explicit and the taxpayer can demonstrate that:

  • they reasonably relied on the advice;
  • where appropriate, they made full disclosure of all the relevant facts;
  • the correct application of the law would result in the taxpayer's financial detriment. Financial detriment means that a taxpayer who received incorrect advice would be financially worse off than a taxpayer who received correct advice.

A4.53 Where a taxpayer has made a return in accordance with an incorrect ruling, HMRC will not seek penalties, where the penalty is dependent on the presence of negligence by the taxpayer.

40 See: Canada Revenue Agency, Income Tax Information Circular IC07-1, dated 31 May 2007.

41 For an explanation of some of the principles that the courts apply see the case of: R (on the application of Bamber) v Revenue and Customs Commissioners (No. 2) [2007] EWHC 798 (Admin).