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GST Rulings aren't worth the paper they are written on, says TIA

Publication date: 25 Aug 99 | Source: THE TAX INSTITUTE

The Taxation Institute of Australia has sent a detailed letter to Federal Treasurer Mr Peter Costello calling on the Government to urgently introduce legislation to make GST Rulings binding.

According to Taxation Institute of Australia President Mr Gordon Cooper, binding GST Rulings cannot currently be issued as the GST Legislation does not allow it. Even if the Commissioner himself wished to issue binding GST Rulings, he cannot.

"Currently if a Ruling covers both GST and income tax issues, only the Ruling on the income tax issues can be binding," said Mr Cooper.

"How can any business plan effectively without the security of binding Rulings on the GST law. How can business rely on even the Commissioners recent statements in respect of choice of accounting basis for GST."

"The argument that the GST is similar to the former Sales Tax system, where non-binding Rulings operated is not tenable given the legal complexity of the GST laws. Until 1992 Income Tax Rulings were not binding."

The Taxation Institute is calling on the Government to align the GST Ruling system with the current system for income tax and fringe benefits tax (FBT) to provide certainty and improve compliance for business.

"Until this unacceptable situation is resolved, business will have the spectre of the Commissioner's ever changing interpretative whim hanging over their heads. Recent income tax cases have shown that the ATO are quite prepared to argue a position contrary to that in a Ruling. The non-binding nature of GST Rulings does not promote good tax administration," he said.