ATO shakes up tax determinations plan for FY19–20

The ATO will only continue to publish four annual taxation determinations, replacing the rest with website material despite industry concern that advisers and taxpayers will not be afforded the necessary protections.

Earlier this year, the ATO announced it was seeking feedback on its proposal to make its 12 annual tax determinations available only on the ATO website.

It argues that making the information in the annual TDs available only on the ATO website will improve the timeliness of publishing this information, and provide easier, simpler and quicker access to the information.

The consultation has since concluded, with the ATO deciding to only continue publishing four of its annual TDs, with the remaining eight TDs to be available solely on the ATO’s website.

The four annual taxation determinations which will continue to be published are:

• What are the reasonable travel and overtime meal allowance expense amounts for the 20xx income year?
• Reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefit tax year commencing on 1 April 20xx.
• What are the rates to be applied on a cents per kilometre basis for calculating the taxable value of a fringe benefit arising from the private use of a motor vehicle other than a car for the fringe benefits tax year commencing 1 April 20xx?
• Value of goods taken from stock for private use for the 20xx income year.

The Institute of Public Accountants general manager of technical policy Tony Greco previously told the ATO that a move to online material would heap additional risk on advisers.

“A taxation determination is considered a public ruling, and as such, is legally binding advice issued by the ATO,” Mr Greco said.

“Public rulings are long being held as binding advice and express the ATO’s interpretation of a particular provision of the law they administer. Where you rely on the binding parts of a public ruling, the law protects you from having to pay a tax shortfall if the advice turns out to be incorrect and you then make a mistake.

“The same cannot be said for material published on the ATO website. Material published on the ATO website is generally considered to be guidance only and is not binding on the ATO. It does not have the protections of a public ruling.”

Likewise, DBA Lawyers director Daniel Butler said that while the ATO website and fact sheets can be useful, they cannot be relied on in the same way a tax determination can.

“If you rely on [tax determinations], the commissioner must apply the law to you in the way set out in the ruling,” Mr Butler said.

“You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

“[With website material], the general administrative practice is that the ATO feels bound to follow its own written materials, but in the event that the ATO is wrong, the tax is still generally payable but penalties may not be imposed.”

If implemented, the ATO’s change is proposed to only impact annual TDs for the 2019–20 income year and the 2020–21 FBT year and onwards.

Mr Greco has called for the ATO to afford protection for taxpayers if the change does go through, noting that it can be hard to scrutinise website changes.

“As data on the website can be changed without leaving an audit trail, there needs to be a way to show historic changes to any updated figures in case of disputes,” he said.

“The updating of website information is not subject to a robust process compared to the compilation of a tax determination, and therefore there must be full transparency over the data posted on the ATO website in case information changes over time.

“As we operate under a self-assessment environment, it is important for taxpayers to have protections afforded by a public ruling if tax determinations are to be replaced with website information.”

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