The Australian Taxation Office (ATO) has introduced a new formal process to give assurance to taxpayers, which will hopefully be faster and involve less expense than the existing private rulings programme.
The ATO will now start issuing formal "letters of comfort". These are intended to let a taxpayer know that the ATO believes the non-compliance risk is low and that the ATO does not intend to invest resources in any investigation of the subject matter of the letter of comfort.
In the new buzzword parlance of the ATO, these letters will only be issued where the ATO believes the taxpayer is "swimming between the flags".
A letter of comfort is an administrative indication of the ATO's position and can not be relied upon as binding against the ATO in the same way as a taxpayer can rely upon a formal private ruling. However, it is a welcome step that should expedite the process of providing assurance to taxpayers, particularly in time-sensitive commercial transactions.
This idea is consistent with the reforms Chris Jordan is instilling in the ATO, to increase the ATO's responsiveness to the needs of the community.
"Letters of comfort" have been embodied in the latest draft public ruling PCG 2016/D1.