Compliance
Public ruling
A public ruling is the ATO's published view on how tax law applies generally. It binds the Commissioner and protects taxpayers who follow it in the circumstances it covers.
A public ruling is a document in which the ATO sets out its interpretation of a tax law for the benefit of everyone. They are published on the ATO website, and they apply to anyone whose circumstances match the ruling. Public rulings cover a wide range of topics, including GST, income tax, fringe benefits tax and superannuation, and they are written to help taxpayers and advisers understand how the ATO will apply the law.
The most important feature is that a public ruling is generally binding on the Commissioner of Taxation. If you follow a public ruling that applies to you, the ATO must apply the ruling, even if the ruling is later found to be wrong. This gives practical protection against extra tax, penalties and interest, as long as you correctly follow the ruling and your circumstances fall within it. You should keep a record of the ruling you relied on.
Public rulings come in different forms. Some are rulings on a general topic, such as how a particular type of supply is treated for GST. Others are for specific groups, such as class rulings, which deal with a defined class of people taking part in a defined arrangement. There are also determinations on narrower matters, and the ATO has other forms of guidance such as practical compliance guidelines that explain its compliance approach without being binding in the same way.
A ruling usually has an explanation of the law, how the ATO views it, examples and sometimes an appendix explaining the reasoning. Because the ATO updates rulings when the law changes or when it changes its view, taxpayers should check that the version they are using is current. A ruling may be withdrawn or replaced, and there are rules on how the change applies to arrangements already begun.
Public rulings are not the law itself. The legislation and court decisions are the ultimate authority, and a taxpayer can take a position different from a public ruling if they have a reasonably arguable position. However, doing so carries more risk, because the ATO will apply its published view in audits and reviews. Many small businesses simply follow the ATO view to keep things simple.
For GST, public rulings address questions such as when a supply is connected with Australia, how particular transactions are classified, and what makes a valid tax invoice. Business owners who face an unusual situation can often find a relevant ruling by searching the ATO legal database or speaking to a registered tax or BAS agent.
This page is general information only. Confirm your situation with the ATO or a registered tax professional.
Worked example
A registered tour company is unsure how to treat a package that combines accommodation and activities. It finds a public ruling on how the ATO treats packages and follows its approach, charging GST on the taxable component. Later, during a review, the ATO accepts the position because the company followed the ruling. If the company had used a different method without support, it may have faced extra GST of several thousand dollars and penalties.
Practical tips
- Check that the ruling you rely on is current and covers your type of circumstances.
- Keep a copy of the ruling and a note of how it applies to you.
- Use the ATO legal database or a registered agent to find rulings on your topic.