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Product Ruling:

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There are a number of sources of legal authorities and rules in taxation law. The ATO issues Public Rulings or Determinations, Private Rulings, Class Rulings, Product Rulings and Interpretative Decisions. These are all sources of authority in how taxation law is interpreted and applied by the Commissioner of Taxation.  However, it is important to note that these secondary sources of law cannot supplant or override statute or regulation. Moreover, they are often used to assist on how a particular section of a case is to be construed and applied generally. A skilled Taxation Lawyer may be able to comprehensively consider all relevant sources of law to include secondary sources, to provide you with detailed advice on how your financial situation is affected by the complex web of taxation law. In this manner it is possible to predict and plan for how it will be treated by the ATO.

A Product Ruling is a binding public ruling on the availability of claimed tax benefits from certain investment products. A “product” refers to an arrangement in which a number of individual investors enter into similar transactions with a common entity or entities. The particular product may be described as either an investment, tax-effective, financial or insurance arrangement. Often, the product is offered to the general public by way of an offering memorandum or prospectus, but it may be put forward to individuals on an invitation basis. The Commissioner will rule on the precise arrangement identified in the ruling. Promoters, or the persons involved as principals in the carrying out of the arrangement (but not the participants), may make a written application for a product ruling. A Product Ruling will only apply to arrangements entered into after the ruling is made. Investors in the product before the ruling is made will not be able to rely on it as a public ruling.

Investors will be protected by a Product Ruling if the arrangement is carried out in accordance with the details in the application. These persons need not seek a private ruling on the tax consequences of their investment in the product. The product ruling is legally binding on the Commissioner and investors can rely on the statements it contains, provided that the arrangements are carried out in accordance with the details provided by the applicant and described in the ruling. If the arrangement implemented is materially different from that described, then the Commissioner may withdraw the ruling and the ruling will not apply to arrangements begun to be carried out after the date of withdrawal.

However, if the arrangement described in the ruling is materially different from the arrangement which is actually carried out, the ruling will not be binding and will be withdrawn or modified. Potential investors in a particular project may wish to seek assurances from the promoter of the project that the arrangement will be carried out as described in the Product Ruling.

Promoters or people involved as principals in the carrying out of the arrangement (but not participants or intermediaries) may apply for a Product Rulings. A written application is required. The Commissioner will not give a Product Rulings for a period exceeding three years from the end of the income year in which it is made, unless exceptional circumstances exist. An experienced Commercial and Taxation Lawyer may be able to consider your factual circumstances to ensure that you take full advantage of any Product Ruling that is applicable to your case.

It is highly recommended that you seek skilled legal and financial advice from an experienced Taxation Lawyer to ensure that you understand and are made aware of the taxation treatment of your financial situation. If you need further legal advice on your tax appeal matter, you may book an appointment with us by telephone on (02) 9233 4048 or by email to info@navado.com.au

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