Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

The Treasurer has provided the following answer to the honourable senator's question:

Taxation Determination 2010/20 is not a proposed measure. Taxation determinations do not alter the existing tax law, but rather set out the Commissioner of Taxation's interpretation of how the existing law works. In a determination, the Commissioner is simply expressing his view of the law enacted by Parliament and he applies accepted principles of statutory interpretation in doing so.

Determinations are not legally binding on taxpayers (that is, they do not create legal obligations under the tax law for them). Once finalised, they are only binding on the Commissioner. Their legal effect is to protect taxpayers who choose to follow the Commissioner's views expressed in them. Taxation determinations have no policy intent, and the government has no involvement in the issuing of taxation determinations. The Commissioner releases draft taxation determinations for public comment before finalising them.

Many taxation determinations are considered by the ATO's Public Rulings Panel. The Panel advises the Commissioner on the issues proposed to be dealt with in taxation rulings and determinations and is made up of senior ATO officers and external experts.

Taxation determinations do not have a revenue impact on the forward estimates because, as far as the law allows, the Commissioner interprets the law consistent with policy intent on which revenue estimates were based. However, they may have a compliance leverage impact by protecting the forward estimates to the extent that revenue is at risk from taxpayers not applying the law properly.

The ATO is therefore unable to provide an answer to questions (1), (2), (3), (5) (c), (6), (7), (8), (9), (10) and (11).

(4) Yes. Taxpayers who have similar structured investments into Australia may re-examine their arrangements in the light of the views expressed in this Determination on the proper application of the current law.

(5) (a) The private equity industry and non-resident investors may be affected if they propose to engage in treaty shopping arrangements with the dominant purpose of avoiding Australian tax.

(5) (b) The normal consultation process for determinations was followed. The draft Determination issued (as TD 2009/D17) on 16 December 2009, the consultation period ran until 29 January 2010, and the final Determination issued on 1 December 2010. In addition, meetings were held in February 2010 with representatives of the Institute of Chartered Accountants Australia, the Taxation Institute of Australian, the Certified Practicing Accountants of Australia and the Australian Private Equity & Venture Capital Association Limited. These bodies also provided written submissions on the draft Determination.

(5) (d) No, apart from the consultation process mentioned in the answer to (5) (b).