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The AAT has refused the taxpayer's request that the Commissioner produce 3 categories of document relating, amongst other things, to the Commissioner's policy or policies on providing (or not providing) private rulings to taxpayers in relation to the application of the rights to future income provisions from the time that the Tax Laws Amendment (2010 Measures No 1) Act 2010 applied, that is, 3 June 2010.

The taxpayer applied for a private ruling on 30 December 2010, which was received by the ATO on 10 January 2011. It sought a private ruling in relation to the taxpayer’s purchase of shares in Australian Wealth Management Limited (AWM). More specifically, the underlying taxation 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, namely AWM and its wholly owned subsidiary companies, were parties are rights to future income in respect of which deductions are presently allowable over time.

The Commissioner indicated to the taxpayer that the private ruling would be processed within 28 days. It was not so processed within that time and was never issued.

On 25 November 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation announced that the legislation creating the deduction entitlement in respect of rights to future income would be amended with retrospective effect from 31 March 2011. Taxpayers who have the benefit of private rulings issued before 31 March 2011 are not to be affected by the changed legislation. On 24 May 2012 the Government introduced Tax Laws Amendment (2012 Measures No 2) Bill 2012 (the Bill) to give effect to this proposal but, at the time of the AAT's decision, the Bill had not been passed by both houses of the Parliament. [It was passed by the Senate on 27 June 2012 and currently awaits Royal Assent.]

In the substantive proceedings before the AAT, the taxpayer seeks an order that the Commissioner's deemed decision to disallow the taxpayer's objection to another deemed decision to deny the private ruling be set aside. In addition, the taxpayer seeks an exercise, by the AAT, of the discretion in s 43(6) of the Administrative Appeals Tribunal Act 1975 to backdate the date of effect to 30 March 2011 or earlier, to counter the effect of the anticipated, but as yet un-enacted, retrospective amending legislation contained in the Bill.

The taxpayer sought the documents to explain the Commissioner's "inordinate" delay in processing the request for the private ruling and to justify its application for the backdating of the AAT's order.

The AAT based its refusal to order production of the documents on the fact that the proposed changes are not yet law. The AAT said, at paras 22 and 23:

"If the legislation were to change before a decision of the Tribunal were made it would then be necessary to consider whether it is possible for the Tribunal to make a decision in relation to the private ruling objection having regard to the changed legislation. That is not a matter that has been argued as yet and is not for present decision. Accordingly it is not appropriate to anticipate that a Tribunal decision in the substantive proceeding could be made with respect to repealed legislation that by the terms of the repealing legislation is no longer operative for the Applicant [taxpayer] and make a direction for production of documents that could or would become operative upon a change in the underlying legislation...

The current circumstance may well present a form of catch 22 difficulty for the Applicant. Without a change to the legislation the Applicant has no need for the documents sought. The Applicant requires the legislation to change to set up the need for retrospectivity and therefore the perceived need for the documents it seeks. However if the legislation does change as foreshadowed, and if the Applicant is no longer entitled to any private ruling as a consequence, then production of the documents sought serves no purpose. The latter potential is one that awaits further argument and analysis; however the difficulty presented by the foregoing conclusion not to direct production of the documents sought in this context has been considered and is acknowledged."

Notwithstanding the "catch 22 difficulty" identified by the AAT, because there was the potential that the application for a direction that documents be produced "may have another airing", the AAT considered the Commissioner's other arguments why the documents should not be produced, namely, that the documents sought were irrelevant, and that the taxpayer was conducting a fishing expedition. This submission was rejected by the AAT, which stated, at para 30:

"The existence, or otherwise of the documents sought could throw decisive weight, either way, in the process of determining whether the Applicant's contentions can be accepted. More specifically, the existence, or otherwise, of category one and two documents could support a conclusion that the reason for the absence of a private ruling is as contended by the Applicant or could show that contention to be false. Similarly, the existence of documents in category three might throw light on whether or not the absence of a private ruling is explained by technical difficulty. The facts as known...are the absence of a private ruling, the absence of an objection decision and delay coinciding with a review within government circles that led to retrospective legislation without apparent complete explanation. Absent other reasons why the direction sought should be denied, in these circumstances the Applicant ought be able to test its assertion."

As to whether the proceedings were futile because an AAT decision in review of a private ruling objection decision cannot be given a date earlier than the date of the original decision, the AAT held that this contention went to the substantive issue in the proceeding, and not to the question of whether the documents should be provided.

Pending passage of the legislation, therefore, the taxpayer's application was refused: IOOF Holdings Limited and FCT [2012] AATA 378 (22 June 2012).


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