The quest for the Holy Grail of taxpayer certainty - the history of the law and administration of Australian tax rulings

Abstract

The Australian tax rulings system has been decades in the making. At each stage during its development the concept of taxpayer certainty has been invoked as the catalyst for change, but rarely has that concept been defined beyond the idea that certainty is obtained from knowing what the Commissioner of Taxation s views are. The system now in operation is claimed by the Australian Taxation Office to give certainty to taxpayers that is unrivalled. In that respect, certainty is meant to encompass the ability to bind the Commissioner and to have a private ruling reviewed by the judiciary.

The history of Australian tax rulings includes developments desiring taxpayer certainty as a consequence, not as their driver. Thus the major aim of the thesis was to thoroughly test the proposition that certainty has not been at the forefront of change. This was carried out by undertaking a study of the history of the Australian tax rulings system, with extensive discussions of the causes and effects of each major development. The result of that aspect of the research was that at every stage of the development of Australia s tax rulings system, the Tax Office has displayed an entrenched and reactive approach, and that this lack of proactivity, including the failure to at any stage develop or consider a strategic and conceptual framework for tax rulings, has been a major contributor to the ongoing quest by taxpayers for certainty via tax rulings.

An ancillary aim of the research was to investigate the extent to which certainty is prevalent in the current tax rulings system. Whilst there is no doubt the system at a practical level does produce known, expected, and favourable outcomes to taxpayers, the system is replete with complexities and uncertainties. A number of recommendations are made to address those problems.