Not A Good Option To Fix A Policy And Drafting Flaw!!

Queensland Parliament

In Issue No. 1 September 2021, The Tax Reformer (TTR) headlined the inadequacies of “Administrative Arrangement” Public Rulings DA00016.2. TTR stated that there are four major problems with this. In its letter to the Editor of The Australian Review of 3 August 2021, TTR listed other problems. Some but not all of the tax design and drafting problems 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 list this exemption!
  • 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?


  • It’s not proper administration if you read the Act but you don’t know of this concession;
  • What publicity was given to this “Administrative Arrangement?”

The law on the first two points are well settled:

  • An “administration arrangement” is an extra statutory. Extra statutory concessions are beyond the powers of the Commissioner: see ,e.g., Chubb Electronic Security Australia Pty Ltd v Commissioner of State Taxation (SA) (2012) 90 ATR 664; [2012] SASC 164 at [74]. White J. and the UK cases referred to in the detailed discussion in “Duties Legislation Queensland”, JG Mann (Thomson Reuters, 2001) paragraphs [TAA.8.10] et seq..
  • Although the Commissioner must exercise good management in the discharge of the Commissioner’s duties, even if it means that not all the tax known to be due will be collected, this simply cannot apply where otherwise dutiable transactions are lodged with the Commissioner. The Commissioner must assess without regard to any “administration arrangement” referred to in a public ruling. This follows from the law so many times stated in the cases as to the Commissioner’s duty not to act contrary to law and that the Commissioner cannot be estopped. See op. cit. at paragraph [TAA.8.40].

So, what can be done to accommodate some urgent problem? Three options come to mind:

  • Insert a statutory provision in Taxation Administration Act 2001 authorising the Commissioner to do what the Commissioner presently does where the Commissioner declares that the “administration arrangement” is needed to accommodate a policy concession/exemption (not an increase in tax or the tax base ), it is approved by the Treasurer and amending legislation will be and subsequently is brought into Parliament within a limited amount of time (and failing which tax is to be reassessed). Not a good option: the rule of law is not well protected and the proposed amendment may not be clear and certain;
  • Extending the practice with respect to ex gratia payments. Not a good option; all a bit messy;
  • Amend the Act before applying the “administration arrangement” : the only way to go.”