The AAT has held that, for the purposes of undertaking its review of the Commissioner’s deemed disallowance of the taxpayer’s objection against the Commissioner’s failure to make a private ruling concerning its claim for a deduction under s 716-405 of the ITAA 1997 re rights to future income, it was not open to the Tribunal to apply the provisions of Pt 3-90 before the amendments contained in the Tax Laws Amendment (2012 Measures No 2) Act 2012, which commenced on 29 June 2012, were made. That amending Act modified the consolidation tax cost setting and rights to future income rules.
In broad terms, the case concerned the issue (or rather non-issue) of a private ruling and whether the taxpayer was entitled to a ruling based on law that had been amended, whether the taxpayer had an accrued right to a ruling based on law that had been amended, and whether any accrued right was abrogated by the terms of the amending legislation.
In the first preliminary decision, the AAT in June 2012 (in AAT Case [2012] AATA 378, Re IOOF Holdings Limited and FCT) dismissed the taxpayer’s application that sought ATO documents to support its primary claim that a private ruling should have been back-dated retrospectively to avoid the proposed retrospective changes to the consolidation regime announced in November 2011 to deny deduction entitlements in respect of rights to future income. The subject matter of the private ruling was the applicability of s 716-405 to the taxpayer’s purchase of shares in another company (Australian Wealth Management Limited). The underlying issue concerned whether or not rights pursuant to a variety of contracts to which the newly acquired subsidiary members of the taxpayer’s consolidated group were parties were in fact rights to future income in respect of which deductions were allowable over time. The Commissioner did not provide the ruling nor deal with the objection within the prescribed time limits thereby giving rise to the taxpayer’s application before the AAT.
The current matter concerned a second preliminary decision in the substantive proceedings. The Tribunal said the taxpayer and the Commissioner had formulated a preliminary question that might assist in resolving the issues between them. That question was:
“For the purposes of undertaking its review of the Respondent’s deemed disallowance of the Applicant’s objection against the Respondent’s failure to make a private ruling concerning its claim for a deduction under section 716-405 in Part 3-90 of the Income Tax Assessment Act 1997 (Cth) (1997 Act), is it open to the Tribunal to apply the provisions of Part 3-90 of the 1997 Act before the amendments contained in the Tax Laws Amendment (2012 Measures No 2) Act 2012 (Cth)?”
The Tribunal answered the question “No”.
(AAT Case [2013] AATA 239, Re IOOF Holdings Limited and FCT, AAT, O’Loughlin SM, AAT Ref: 2012/0578, 19 April 2013.)
[LTN 75, 22/4/13]