What we can rule on

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Legislation

Inland Revenue can make binding rulings on most provisions of the following Acts and regulations:

  • The Estate and Gift Duties Act 1968
  • The Gaming Duties Act 1971
  • The Stamp and Cheque Duties Act 1971
  • The Goods and Services Tax Act 1985 (except sections 12 and 13 of that Act)
  • The Income Tax Act 2007, except to the extent that the matter in question is or could be the subject of a determination of Inland Revenue in relation to:
    • a financial arrangement other than as permitted by section 91CC
    • petroleum mining
    • accrual expenditure
    • depreciable property
    • specified livestock
  • The Tax Administration Act 1994 at sections 91CB and 91CC sets out further situations where Inland Revenue may provide binding rulings in relation to the status of a person or item of property
  • An Order in Council or regulations made under any of the Acts listed above, including double tax agreements (unless the matter is or should be dealt with by the competent authority), except:
    • where the relevant provision is or could be the subject of one of the determinations referred to above; or
    • section RD 24 of the Income Tax Act 2007.

When we cannot rule

Inland Revenue cannot make binding rulings on the Tax Administration Act 1994, or any matter relating to the administration of the tax system, including Inland Revenue's rights or obligation to exercise its powers in any of the following areas:

  • imposing or remitting penalties
  • inquiring into the correctness of any return or other information supplied by any person
  • prosecutions, or
  • recovering debt owing by any person.

Further, in some situations Inland Revenue is unable to issue a private or product ruling, as set out in the table below. If we determine that we are unable to rule because of one of these situations, we'll treat the application as though it had been withdrawn. In some of these situations, although we are unable to give a binding ruling, we may be able to assist by providing a non-binding indicative view.

 

When we can't rule
Situation Description
Not seriously contemplated We cannot make a private or product ruling if, at the time the application is made or at any time before the ruling is issued, we consider that the taxpayer is not "seriously contemplating" entering into the arrangement.
Application contains insufficient information We cannot make a private or product ruling if the applicant does not give us sufficient information. We'll ask for additional information if necessary, and if the information is not provided we can decline to make a ruling.
Facts and factual matters Except in the international transfer pricing context (ie, where the ruling is an APA), we cannot make a private or product ruling determining a "proscribed question". "Proscribed question" is defined as meaning a question of:
  1. whether facts are correct or exist.
  2. a person's purpose or intention, for the purposes of any provision of the Income Tax Act 2007 that expressly refers to a person's purpose or intention, other than as permitted by section 91CB of the Tax Administration Act 1994.
  3. the value of a thing.
  4. commercially acceptable practice, for the purposes of any provision of that Act that expressly refers to commercially acceptable practice.
As part of your application, you must provide all material facts. Where this is not possible, we can make or conditions or statements of facts as to future facts in the ruling itself.

If the Commissioner issues you with a draft ruling containing a specified condition or material fact, you may be able to obtain a level of certainty through the factual review process.
Generally accepted accounting practice We cannot make a private or product ruling if the application would require us to form an opinion on the application of generally accepted accounting practice.
Frivolous or vexatious applications We cannot make a private or product ruling if the application is "frivolous or vexatious". "Frivolous" applications are not just ones that are "trifling" or "silly"; they include requests which could not possibly succeed, or which no reasonable person could treat as genuine.
Private or product ruling already exists If a private or product ruling already exists on the application of a specific tax law to a particular arrangement, we cannot give another ruling on the same tax law for the same period covered by the existing ruling. However, a further ruling can be issued for subsequent periods or tax years if the arrangement continues after the duration of the previous ruling or is in relation to a different tax law.
Double tax agreement procedures An arrangement may have tax implications in another country with which New Zealand has a double tax agreement (DTA).
We are able to rule on DTAs, unless the matter is (or should be) dealt with by the competent authority under a DTA. We'll consult with the competent authority before issuing a ruling concerning a DTA.
We are unable to rule on an issue that is within the scope of a mutual agreement made under a DTA, or on the interpretation of a mutual agreement.

For more information see QB 08/03: Application for a private ruling or product ruling on an issue dealt with in a mutual agreement made under a Double Tax Agreement.
The tax, duty, or levy is due and payable We cannot issue a private ruling if the matter on which the ruling is sought concerns a tax (excluding provisional tax), duty, or levy that is due and payable, unless we receive the application before the tax (excluding provisional tax), duty, or levy is due and payable. The correct way to challenge any tax assessed is through the disputes resolution and/or challenge process.
Assessment already made We cannot make a private ruling if an assessment relating to the person, the arrangement, and a period or a tax year to which the proposed ruling would apply, has been made. This includes where a taxpayer has filed a return, due to this being a self-assessment.

For more information see QB 08/01: Tax Administration Act 1994 - Section 91E(4)(f) and self-assessment.

Again, in such cases, the disputes resolution process is the correct avenue to follow. The only exception to this is if Inland Revenue received the application before the assessment was made.
Subject to an audit or investigation We cannot issue a private ruling if we are auditing or investigating how the taxation law applies to the person and to the arrangement for a period or for a tax year to which the proposed ruling would apply.

For more information see QB 07/05 - Ability to rule where the Commissioner is auditing or investigating - whether the Commissioner has a discretion to rule or is prohibited.

Any disputes about subsequent assessments can be challenged through the disputes resolution process.
Notice of proposed adjustment We are unable to issue a private ruling if the application relates to a person, an arrangement, and a tax type or separately identifiable issue that is the subject of a notice of proposed adjustment under the tax dispute resolution process.
Arrangement subject to an objection, challenge or appeal If the arrangement on which the ruling is sought, or a separately identifiable part of the arrangement, is substantially the same as an arrangement that is subject to an objection, challenge or appeal, whether in relation to the applicant or any other person, we can decline to make a private or product ruling.
Debt exists for previous ruling We can refuse to issue a private or product ruling to an applicant with an outstanding debt for a past ruling application. An applicant has an outstanding debt if they have not paid the amount stated on an invoice for an earlier binding ruling, on or before 60 days after the date stated on the invoice.
Resource constraints We can decline to make a private or product ruling if we do not have sufficient resources to do so. This would normally only happen if a particular application required very extensive resources, or highly specialised expertise that was unavailable at the time of the application or in the foreseeable future.
Reconstruction We can decide not to make a private ruling on how section GA 1 (Commissioner’s power to adjust) of the Income Tax Act 2007 applies or would apply to an arrangement.

Determinations

Generally, we are also unable to rule if an issue is or could be the subject of a determination in relation to a financial arrangement, petroleum mining, accrual expenditure, depreciable property, livestock, or record keeping.

In relation to the financial arrangements rules, we can issue taxpayer specific determinations on certain matters set out in the legislation (provided that no general determination applies). The matters that can be determined include:

  • how a spreading method applies to a financial arrangement
  • the method for determining what portion of the income or loss is solely attributable to an excepted financial arrangement
  • the method for determining the future value of property.

We may also be able to rule on some of these situations under section 91CC of the Tax Administration Act 1994. We treat applications for determinations in the same way as private rulings, except that they are published.

See Application for determination relating to financial arrangements (IR735) on the Guides and forms page.


Factual review

The Factual Review process has been established to enhance the utility of binding rulings in situations where a ruling is, or is likely to be, issued subject to a critical factual condition. The process will give taxpayers an opportunity to obtain a level of certainty from Inland Revenue regarding the likelihood that the condition will be satisfied.

Find out more about the factual review process

 

 

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