The ATO on Thur 4.12.2014, updated Practice Statement PS LA 2011/27 (Matters the Commissioner considers when determining whether the ATO view of the law should only be applied prospectively). The ATO had previously issued proposed amendments to the Practice Statement following the Full Federal Court’s decision in Macquarie Bank Limited v FCT [2013] FCAFC 119.
Note the purpose of the Practice Statement remains the same – that is, it explains the procedures for ATO personnel to follow and the matters to take into account in determining whether the ATO should not take action to apply its view of the law in past years or periods.
Some of the key amendments to the Practice Statement are as follows:
- clarifies that the Commissioner may and should give substantial weight to broader considerations when exercising the general powers of administration, including in particular the benefits to the tax system of administering the law in a way that promotes certainty and fairness in practice;
- allows that a pattern of ATO conduct in relation to a single taxpayer may raise u-turn considerations. The Practice Statement says one relevant consideration in such a case would be the desirability of treating taxpayers in comparable situations consistently. However, this might need to be balanced against the desirability of avoiding unfair treatment in the particular circumstances of individual cases; and
- confirms that nothing in the Practice Statement binds anyone to act contrary to statute. In particular, the Practice Statement says any assessment (including an amended assessment) of a taxpayer’s liability must be based on the law as the ATO understands it to be having regard to any relevant case law, and not on any other basis. The same principle applies if the ATO is deciding an objection, issuing a private ruling or making submissions to a court or tribunal on the relevant point.
[LTN 236, 5/12/14]