Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

asked the Minister representing the Treasurer, upon notice, on 10 March 2011:

With reference to Taxation Ruling 2010/D9 (deductibility under subsection 295-465(1) of the Income Tax Assessment Act 1997 of premiums paid by a complying superannuation fund):

(1) What is the policy intention of the proposed measure.

(2) How does the proposed measure enable the policy intention to be achieved.

(3) Is the effect of the proposed measure revenue neutral:

(a) if so, how has revenue neutrality been achieved;

(b) have other saving measures been needed to achieve revenue neutrality;

(c) if not, how much revenue is expected to be raised as a result of the measure; and

(d) can the annual numbers for the forward estimates period be provided, and any further information covering the longer term.

(4) Have the likely administrative and compliance costs of implementing the proposed measure been assessed; if so, what are they.

(5) (a) What stakeholders will be directly affected by the measure;

(b) have these stakeholders been involved in consultation prior to and during the development of the measure;

(c) what consultation has the Government been engaged in; and

(d) have independent bodies or experts been involved in the consultation process.

(6) Is this proposed measure a government response to an identified problem; if so, what problem is it addressing.

(7) Were any alternatives considered before this approach was proposed, if so:

(a) can details of those alternatives be provided; and

(b) why was it decided that those options would not be implemented.

(8) Will inaction pose a risk to the integrity of the tax system or broader government administration; if so, how would you rate that risk.

(9) What modelling has been carried out in developing the proposed measure.

(10) Have the broader implications of the implementation of the measure on the economy been forecast; if so, what are they.

(11) Have international comparisons been considered and does the proposed measure accord with international 'best practice'.

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

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

Taxation Ruling 2010/D9 is not a proposed measure. Taxation rulings 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 ruling, the Commissioner is simply expressing his view of the law enacted by Parliament and he applies accepted principles of statutory interpretation in doing so.

Taxation rulings are not legally binding on taxpayers (that is, they do not create legal obligations under the tax law for them). Rulings, once finalised, 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 rulings have no policy intent, and the Government has no involvement in the issuing of taxation rulings. The Commissioner releases draft taxation rulings for public comment before finalising them.

Most taxation rulings 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 rulings 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. In explaining the law, this draft Ruling may influence trustees of complying superannuation funds to change the type of total and permanent disability insurance policies that they take out.

Industry practice under the former provisions in the Income Tax Assessment Act 1936 and under the Income Tax Assessment Act1997 (ITAA 1997) when Division 295 was first introduced was to claim deductions relating to total and permanent disability (TPD) policies irrespective of whether, in circumstances where a payout was made under the policy, the complying superannuation fund could make a payment to the member.

Under the provisions of the ITAA 1997, where complying superannuation funds continue to hold total and permanent disability insurance, the premium for which is not wholly deductible, they will need to have the deductible amount of the premium specified in the policy. If this is not done, the complying superannuation fund will need to obtain an actuary's certificate to calculate the deductible amount.

(5) (a) Micro enterprises, small and medium enterprises, large business and superannuation funds may be affected.

(5) (b) This matter was discussed with members of the Superannuation Technical Sub-group (membership comprises representatives of the major tax, law and accounting professional associations and senior members of the ATO) of the National Tax Liaison Group at a workshop in late 2008. The industry are aware of the ATO view as explained in this draft Ruling. As a consequence of the Commissioner having made industry aware of the ATO interpretation of the law, the Government agreed to transitional provisions to allow the industry time to comply with this interpretation. The transitional provisions were enacted as part of the Superannuation Legislation Amendment Act 2010.

The normal consultation process for rulings is being followed. The draft ruling was published on www.ato.gov.au on 15 December 2010 and public consultation closed on 14 February 2011.

(5) (d) This matter was discussed with members of the Superannuation Technical Sub-group of the National Tax Liaison Group at a workshop in late 2008. The industry are aware of the ATO view as explained in this draft Ruling. The Public Rulings Panel provided advice in the development of this draft Ruling.