What is a Product Ruling?

The Australian Taxation Office (ATO) may issue product rulings. These are rulings on the tax consequences of investing in a particular product and are intended to provide certainty to potential investors in that product.

A product is an arrangement in which a number of taxpayers enter into substantially the same transactions with a common entity or group.

Product rulings are public rulings on specific provisions of the tax law as they apply to investors in the particular product, and they bind the Commissioner.

They are binding only in relation to the specific arrangement described in the ruling. If the arrangement actually carried out differs materially from that described in the ruling, the ruling will have no effect. A material difference is one which would have a different tax consequence from that set out in the ruling.

Product rulings do not become binding until they are published and notice is given in the Commonwealth Government Gazette. They apply only to arrangements commencing on or after that date.

By giving a product ruling, the ATO does not guarantee the investment or its commercial viability. It provides no assurance as to the level of charges, or whether they are reasonable, or the level or reasonableness of any projected returns.

Investors must form their own views on these matters.

The ATO monitors compliance with product rulings by issuing questionnaires, requesting additional information and making on-site visits to project locations to ensure that projects are being carried out in accordance with rulings.

This information is a summary and has been prepared for general information purposes only. It is not intended to be nor should it be relied upon as a substitute for legal or other professional advice.