It is important for SMSF professionals and clients to understand what level of protection different types of ATO materials provide with some documents are non-binding on the ATO, says an industry law firm.
DBA Lawyers director Daniel Butler said the ATO provides a large amount of guidance material and while it feels bound by its published material from an administrative viewpoint, there are certain publications that don’t actually bind the ATO.
“Only certain documents provide a precedential ATO view. This is the ATO’s documented view about the application of any of the law administered by the ATO in relation to a particular interpretative issue,” explained Mr Butler.
The ATO has precedential views to ensure its decisions on interpretative issues are accurate and consistent, he said. The documents containing precedential views include public rulings, ATO interpretative decisions, decision impact statements and documents listed in the Schedule of Documents containing Precedential ATO Views.
While private binding rulings (PBRs) are binding on the ATO in relation to the particular taxpayer that the PBR is issued to, other taxpayers that decide to rely on information in the register of PBRs “do so at their own risk”, warned Mr Butler.
“An example, where this may prove risky for SMSFs is if they relied on a favourable PBR issued to another taxpayer on a nil interest LRBA from a related party since there would be no protection from that PBR, as it only protects the taxpayer covered by that PBR,” he explained.
