Private Binding Ruling

I just wanted to know for how private binding ruling works. Who can apply and what are the pros and cons using this for tax return purpose.

 

Google says....


Paul says a BPR is ONE way a taxpayer can present facts of a issue to the Commissioner. The Commissioner may issue the ruling (or may refuse) and it must be followed by the taxpayer. Usually used for issues of uncertain outcome rather than to obtain a answer. They are not issued for a matter of general tax law

I would start with personal tax advice. You can hang yourself with rulings.

 

My friend who used to work in the ATO says it is like waving a red flag at a bull.

But they have their place.

 

There's no legal requirement for a taxpayer to follow a private ruling. Although, if you apply for a ruling and then don't follow it you are inviting trouble.

Generally, you should only apply for rulings where (i) you are confident you know the ATO is going to rule in your favour, or (ii) you are risk adverse and want certainty from the ATO. Sometimes it is better to just get proper advice and adopt a reasonable position without notifying the ATO of the issue.

 

Many years ago I applied to the ATO for a a private ruling on bribes for a police client. It took a while but we got it through. He had accurate records of what he had given to each person and the reason why. He was called up and questioned, being a police prosecutor he had no problems answering

 

He was giving bribes?

 

Yes or as he put it....paying for information

 

How did he substantiate the deduction?

 

And giving a bribe is a criminal offence, so is taking one - any investigations?

 

No...in fact it was published on the front page of the Age in a cartoon. Showing the crim as a "Dependant".