Private Rulings – if you lodge your own tax online then this is your new best friend.
A private ruling sets out the Commissioner of Taxation’s opinion about the way a tax law applies, or would apply, to your particular circumstances.
If you rely on a private ruling given to you by the tax office, and you lodge your tax return based on the answer given in that ruling, then the tax office is bound by that yes or no answer, and can’t come back and challenge you later.
For example, Sam drives his car between work sites every day carrying a large tool box. He is unsure if the tool box would be considered bulky or heavy enough by the Tax Office to claim a tax deduction for motor vehicle travel in his tax return. He submits a private ruling asking for the opinion of the Tax Office. He sets out the size of the tool box and how heavy it is in the private ruling, and he also provides details of his occupation and why he is required to carry his tool box between work sites. A few weeks later the tax office provides Sam with an answer to his question, including details on why they came up with that answer, and the applicable tax law it relates to.
A private ruling is simple to do, won’t take long at all, and the best bit is its FREE!
If you prefer, your accountant can lodge a private ruling for you. However, just be warned that this can cost a considerable amount of money, so best to try lodging it yourself.
Note that sole traders, partnerships, trusts and companies can also lodge private rulings if they are unsure of how to apply tax and GST law to their business.
ATO Private Rulings Database
Details of every private ruling ever submitted is kept on the Tax Office website. Personal details have been withheld to protect people’s identities, but everything else remains the same. Unfortunately you can’t apply the tax law based on other people’s private rulings. This will not stand up if the tax office decides to challenge you. You can, however, get a very good idea of what the tax office might come back and say to someone with similar circumstances.
Maybe it’s just an accountant thing, but I have a lot of fun going through old private rulings. You can learn an incredible amount about what you can and can’t claim for your occupation type. There is certainly a lot of juicy information in these private rulings compared to the very general information that is available on the new tax office website.
When searching the private rulings I suggest typing your occupation in the search and ticking deep content search.
ATO Private Rulings Application Form
If you’re interested in reading more on private rulings, or you wish to lodge one, then you can find the application form here at the Australian Taxation Office.
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