Cost of obtaining a Private Ruling

[Ian (WA)]

Afternoon All,

I'm led to believe that if I were to approach the ATO for a Private Ruling, for Otherwise Deductible Salary Sacrifice on IP Interest Payments I would have to pay some hefty fees. I'm not sure if this is entirely correct.

Having said that, I know Julia Hartman's DIY kit comes at a $ cost, but that is for her service not the ATO.

Can someone enlighten me please?

Cheers,

Ian

 

[Raddles]

Hi there
I once did email a query to the ATO and an answer came back as a private ruling - there was no cost involved.
What fees do you think are involved?
Costs may be payable are if you need to pay for a real estate valuation for a query in relation to property - thats the only costs I can think may be involved - those who have applied for more rulings may correct this assumption - but have also applied for state OSR rulings for client's and haven't had to pay a fee.
thanks

 

[Ian (WA)]

G'day Raddles,

Comments came to me via a two line email from my accountant. Essentially she indicated that she had notes from a Taxation Course she had attended and the cost of obtaining a private ruling could be expensive?

It sounded odd to me, but i'm giving her the benefit of the doubt as she may have been referring to the bigger picture. Unitl I get to speak with her in detail I thought I would see if anyone here could shed any light on the costs???

Cheers,

Ian

 

[coastymike]

Ian,

The costs would really depend on the complexity of the situation and whether the adviser is trying to argue something that would be adverse to the ATO. If it is something quite simple then an application by an individual is quite easy but remember the ATO takes a revenue positive approach. We had a recent situation where we argued that something was on capital account as oppossed to revenue account and using arguments from case law we obtained a positive ruling in favour of the client. The previous application by the client, which did not include pertinent facts which distinguished it from various cases, was a neagtvie ruling in favour of the ATO. It depends on the situation. Where an adviser puts together an application the costs are a few thousand dollars. It depends on the potential tax savings as to whether the costs outweigh the benefits.

 

[Ian (WA)]

Hi Coastymike,

Thanks for the extra info.

I'd like to think our circumstance shouldn't be too unusual for the ATO in that we are looking at simply applying to salary sacrifice interest payments for an IP under the 'Otherwise Deductible' banner via my current employer (who does support this type of arrangement).

I would hope there would be enough previous documentation / case history within the bowels of the ATO archives to approve this fairly easily. Having said that, I appreciate they will treat each application on it's own merit and upon whatever supporting documentation is provided.

Which begs the question, how do M&D investors fare when applying using a generic DIY kit such as Julia's (Bantacs)? Are applicants then asked to provide more and more information if the ATO query any point?

Cheers,

Ian.

 

[Celeste]

Hi Ian WA

I asked my account re private ruling, he said do not bother but I wanted an answer straight from the ATO so I lodged my own.

It took filling out forms on the ATO web site and submitting via the web site, then there was 3-4 phone calls from the ATO and then the ruling - cost Nil.

It was about fixing my equity line because of a mix up with investment / private stuff. I wanted to seperate them.

Hope this helps.

 

[Celeste]

Hi Ian WA

I asked my account re private ruling, he said do not bother but I wanted an answer straight from the ATO so I lodged my own.

It took filling out forms on the ATO web site and submitting via the web site, then there was 3-4 phone calls from the ATO and then the ruling - cost Nil.

It was about fixing my equity line because of a mix up with investment / private stuff. I wanted to seperate them.

Hope this helps.

 

[JoyBoy]

Ian, private rulings are free and it will generally take the ATO 28 days to reply to your question unless they require additional information from you. It is therefore suggested that when you submit your request for a private ruling, that you include all the information necessary for the ATO to rule. Each time that additional information is requested from you, the ATO will add 14 days to reply to your ruling.

Accountants will generally charge you a fee for applying for a private ruling on your behalf. I would only recommend using an accountant if the situation is complex. I would do a cost vs benefits analysis and determine whether the cost charged by the accountant is lower than the potential tax saved. There is also the possibility that the ruling will be negative....

 

[kristaje]

Hi Ian,
Sorry I can't help with your question.

I heard about the Bantacs kit before, and was quite interested in talking to my employer re. it. Just wonder how much is the kit cost?

Thanks,
Jen