Are Public Rulings Really Required?

Why do OSR’s require these if the policy and drafting of legislation is done well at the start?

TTR will critically look at each jurisdiction’s public rulings. There are many jurisdictions in which the public rulings are out of date and, in some cases, simply wrong!


Letter to Australian Financial Review on DA00016.2

Australian Financial Review.
3 August 2021


The Queensland Revenue Office (QRO) has just added to the maze of uncertainty in which business operates.

On 21 July 2021, the QRO issued “Public Ruling DA000.16.2” to provide stamp duty relief on small business restructures under the Duties Act. Although the policy behind this will be welcomed by small business, its implementation is sadly poorly thought through. In fact, it is not a “Public Ruling” as defined by the QRO at all but an extra statutory concession described as an “Administration Arrangement”. Without getting bogged down in semantics, a Public Ruling is, as the opening paragraph says, an interpretation by the Commissioner of a piece of legislation. DA000.16.2 simply does not do this but introduces an “Administrative Arrangement”, a new unlegislated exemption. Although that observation may be thought carping, it goes to show a certain lack of thought and a looseness of proper tax administration. It is hard to think that this “Administrative Arrangement” was subject to outside consultation. Perhaps it was!

Some but not all of the tax design and drafting problems with this “Administrative Arrangement” can be pointed out here.

  • The QRO has no power to alter the incidence of duty under the Duties Act. That can only be done by the Queensland Parliament. To do otherwise breaches the QRO’s own Charter.
  • As this “Administrative Arrangement” is not law, a taxpayer cannot contest a decision of the QRO that it doesn’t apply in the usual way. The QRO is not bound by this “Administrative Arrangement” and must enforce the law at the time.
  • Business requires certainty and that is plainly lacking here.
  • No private ruling is available, let alone a binding private ruling similar to the ATO. Under paragraph 24, a taxpayer takes their chances that the exemption will apply and the QRO will abide by it.
  • There are so many vague phrases (e.g.) paragraph 24 requires a taxpayer when applying for the exemption to submit “the information required by the Commissioner”. Where is that information? Form D2.2 doesn’t really help!
  • There is no help line to answer the many questions which inevitably taxpayers and their advisers will have.
  • Fundamental principles of valuation are left unstated, such as the valuation of goodwill; and is goodwill (e.g.) “small business property” which is “actively used” as required?
  • A “small business entity” must not have annual turnover of more than $5 million but when/how is that calculated?
  • Many of the words and phrases leave a taxpayer wondering just what is required such as ”directly held”, “beneficiaries” in some cases, “rights and interests”, “actively used”, “directly used”. The use of those type of words invites technical analysis which will be done in due course.
  • What if the small business is conducted across many jurisdictions?
  • It is unclear if the transfer of the relevant small business property would be affected simultaneously with an allotment of shares in the new corporation. Is there any chance of duty being then applying, such as landholder duty?

This “Administrative Arrangement” will be the subject of close technical analysis and comment by The Tax Reformer in due course. It’s time to smarten up lax Queensland tax administration. Business screams out for certainty. No more taxation by policy decree please. Let’s get exemptions like this one clearly drafted and passed by Parliament.

Yours sincerely,

Dr. Jeff Mann

Executive Director,

The Australian States & Territories Tax Reformer Pty Ltd (The Tax Reformer).