1.1 This is the report on the review conducted by the Inspector-General of Taxation (Inspector-General) of the Australian Taxation Office's (Tax Office or ATO) administration of public binding advice. This report is made under section 10 of the Inspector-General of Taxation Act 2003 (IGT Act).

1.2 The review was announced on 12 October 2007. Its terms of reference are reproduced in Appendix 1 to this report. Details of how the review was conducted are also given in Appendix 1.

1.3 The decision to undertake the review was prompted by concerns raised with the Inspector-General by industry and tax practitioners.

1.4 A number of key recommendations arose from the review. These are listed in Chapter 2.

1.5 Chapter 3 deals with the Tax Office's view on what matters it can make the subject of legally binding advice. Chapter 4 deals with the nature of Tax Office advice that has been issued since major changes to the rulings law were introduced in 2006. Chapter 5 deals with the issue of a Tax Office 'general administrative practice'. A brief history of Australia's rulings system is in Appendix 3.

1.6 During the course of the Inspector-General's review, the Tax Office made or proposed a number of changes to its processes for public advice. Some of those changes directly addressed concerns raised with the Inspector-General. All changes made or proposed by the Tax Office are noted in this report wherever relevant.

1.7 The Commissioner of Taxation's response to the review is in Appendix 2. The Commissioner's detailed comments on each recommendation of the report are set out immediately below each recommendation.