“Systemic dysfunctionality” is alive and well at the QRO! Confusion on confusion!

Cartoon: tax advisors discuss the confusing situation of Queensland's tax legislation.

By an email of 11 April 2024, the Queensland Office of Revenue (QRO) proudly announced: “As part of our commitment to support [sic] self-assessors, we are pleased to advise a new [sic] system of practice directions has been established. The practice directions will sit alongside the existing suite of public rulings on the QRO website.” But that’s not right if it is to suggest that there have been no Practice Directions in the past. It isn’t hard to find where the QRO acknowledged the previous dichotomy between Practice Directions and Revenue Rulings: see, for example, Practice Direction – General: GN1.3 and Public Ruling – General : G1.2.

The dichotomy between Public Rulings and Practice Directions was removed years ago precisely because it made no sense to separate them. It only confused taxpayers and tax practitioners. So, why go back to that system? There is nothing to be gained let alone to “support self-assessors”. This “new” system requires the QRO to hold explanatory education webinars not only for self-assessors but also for taxpayers and tax practitioners.

How does a taxpayer or a tax practitioner, especially a self-assessor, handle paragraph 3 of each of GEN001.7 and GEN001.1 which states: “Further, where necessary, some matters of interpretation may be contained in a practice direction, or some matters of practice may be contained in a public ruling.” This effectually jumbles how one is supposed to rely on what each of the Practice Directions and Revenue Rulings system is about. You have to not only search through the Practices Direction but also the Revenue Rulings to see if anything in either applies to the matter in point. And worse: if you find something in both, you have to make a judgement as to how much may be applicable. Neither of those paragraphs gives any precedence one over the other between Public Rulings and Practice Directions (contrast Public Ruling GEN002.1, paragraph 6) but the taxpayer and the tax practitioner have to “consult” both the Public Rulings and the Practice Directions which confuse and adds cost for one thing to taxpayers. And note the woke use of “their”. It no doubt refers back to the singular “Commissioner”, an absurd example of etymological gymnastics!

That is precisely why the dichotomy was abolished. The best example of that is in the area of rulings affecting the matrimonial exemptions.

The Practice Directions and the Public Rulings commenced on different dates (see paragraph 14 of each of GEN001.7 and GEN001.1). Why? The answer is not easy to find but are set out in Public Ruling GEN002.1. QRO should have issued something like an Explanatory Note on how all of this fits together.

Has the resurrection of the dichotomy between Public Rulings and Practice Directions been driven by the need to finally, after years and years of requests by tax practitioners for the QRO to state its view on (for example) the nature and valuation of goodwill for professional partnerships? That is, QRO doesn’t have to issue a Public Ruing anymore on the nature and valuation of goodwill for partnerships. That leaves the chances of arriving at an Australia wide definition and valuation methodology for goodwill kicked down the road again.

“New” Practice Direction DA000.2.1 sets out the QRO’s requirements for professional partnerships. A draft Revenue Ruling Stamp Duty: 41.1D was issued by the QRO in 1999 (see Queensland Law Society, Proctor of 1995 Vol.15 No 1, reproduced in Duties Legislation Queensland, JG Mann (Thomson Reuters) paragraph 2.5520, item 7) for “public comment” but did not go ahead because of push back from the QLS committee. So, after 30 years of maturation, this is the best the QRO can do. There is nothing in this “new” Practice Direction about arguments around “No goodwill” partnerships, that is, where any goodwill must be valued at NIL. See the ATO Taxation Ruling IT 2540; Taxation Determination TD 2011/26 where goodwill is to be determined at NIL. What a daunting task for taxpayers and their advisers to understand Practice Direction DA000.2.1. Will the QRO offer any webinars on this Practice Direction? Hopefully, but that is a forlorn hope. As an example of The Tax Reformer’s (TTR) pessimism, the QRO held a webinar on 6 March 2024 titled “Need help with your transfer duty transactions?” Enquiries by TTR of the QRO reveal that this was not a “Master Class” that is, it did not teach anything but looked at procedures.

The email from the QRO ends up stating: “The Practice directions now available relate to duties, first homeowner grant and taxation administration legislation, with more to follow.” No, no – not more! Please!