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/D9 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. This draft Determination addresses taxpayers' concerns by providing taxpayers with options to prevent a deemed dividend arising under Division 7A of Part III of the Income Tax Assessment Act 1936 (ITAA 1936) (Division 7A) as a result of the operation of new section 109XI of ITAA 1936. The ATO also consulted closely with tax professional bodies to ensure the draft Determination issued quickly to avoid potential compliance costs for taxpayers.

(5) (a) Individuals, micro enterprises and small and medium enterprises may be affected by this Determination to the extent of the options available to them in relation to section 109XI. No specific industries will be affected.

(5) (b) The normal consultation process for determinations is being followed. The draft determination was published on www.ato.gov.au on 15 December 2010and public consultation closed on 4 February 2011. In addition, the ATO has consulted with representatives from peak professional bodies prior to issuing this draft Determination and has received submissions from tax practitioners.

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