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Practice Statement Law Administration

PS LA 2012/1


Engagement of Tax Counsel Network on high risk technical issues

Attention This document has changed over time. View its history.

Contents  
1. What is this practice statement about?1
2. When is it mandatory to engage TCN?2
3. In what circumstances is 'engagement' based solely on level of risk?3
4. How do I engage TCN?4
5. How can we ensure TCN independence?5
6. Where can I find more information on engaging TCN?6
7. More information7

This practice statement is an internal ATO document, and is an instruction to ATO staff.

Taxpayers can rely on this practice statement to provide them with protection from interest and penalties in the following way. If a statement turns out to be incorrect and taxpayers underpay their tax as a result, they will not have to pay a penalty. Nor will they have to pay interest on the underpayment provided they reasonably relied on this practice statement in good faith. However, even if they don't have to pay a penalty or interest, taxpayers will have to pay the correct amount of tax provided the time limits under the law allow it.

This Law Administration Practice Statement outlines when and how to engage officers of Tax Counsel Network on high risk technical issues.

1. What is this practice statement about?

This practice statement sets out the guiding principles behind the referral of high risk technical issues1 to Tax Counsel Network (TCN) and the appropriate level of engagement of TCN officers on those issues.

2. When is it mandatory to engage TCN?

You are required to engage as early as possible, in relation to the following:

·
 the application of Part IVA or section 45B of the Income Tax Assessment Act 1936 or the application of the general anti-avoidance provisions of any other tax legislation or of any other tax legislation
·
 strategic litigation
·
 public rulings (except annual, class and product rulings)
·
 matters where, during a compliance process, no change in the ATO position is identified but the affected taxpayer maintains that the ATO view should only be applied prospectively pursuant to Law Administration Practice Statement PS LA 2011/27 Determining whether the ATO's view of the law should be applied prospectively only.

3. In what circumstances is 'engagement' based solely on level of risk?

Business lines must assess the risk associated with technical issues in accordance with the ATO's Risk Management Framework matrix . That risk matrix is based upon six categories of risk - low, moderate, significant, high, severe and catastrophic. Where the risk is assessed, according to that matrix, as significant and above, the business line must engage TCN.

4. How do I engage TCN?

The standard procedure to engage TCN is through the technical engagement process. You need to complete a technical engagement template and forward it to the Work Allocation Reporting and Monitoring (WARM) team mailbox.

Where the matter is urgent, direct contact with a TCN officer may be desirable, but the matter should also be referred through WARM.

TCN officers may also be engaged on an informal basis to assist with matters such as risk assessment and issue identification. If the matter does not occupy more than two hours of the TCN officer's time, it will not be necessary for the business line officer to lodge an engagement template with WARM.

5. How can we ensure TCN independence?

If TCN is engaged on an objection, the responsible TCN officer must not have been involved in the matter at an earlier stage.

6. Where can I find more information on engaging TCN?

The Guide to managing high risk technical issues contains more detailed advice and instruction on risk assessment and the methods of engagement of TCN.

7. More information

For more information, see:

·
 PS LA 2011/27 Determining whether the ATO's view of the law should be applied prospectively only
·
 Risk management framework
·
 How to engage Tax Counsel Network (TCN) - technical engagement process
·
 Guide to managing high risk technical issues

Amendment History

Date of amendment Part Comment
15 July 2016 All Updated to new LAPS format and style.
  Part 5 Inserted section on how to ensure TCN independence.
11 October 2013 All Updated Law and Practice to the Tax Counsel Network
  Paragraph 1 Removed footnote reference to Legal Services Branch
  Paragraph 8 Removed law design from the categories of work that are mandatory to come to TCN
  Paragraph 9 Inserted to acknowledge the role of Integrated Tax Design, and recognise tax design work as having a level of inherent risk sufficient to support engagement of Tax Counsel Network officers
  Paragraphs 11 and 12 Revised content to indicate that oversight of TCN priorities will be through the Law Interpretation Forum.
31 August 2012 Paragraphs 9 and 10, Other references Updated name of Work allocation, reporting and monitoring team

Date of Issue: 10 April 2012

Date of Effect: 10 April 2012

[1]
In this practice statement, the words 'high risk' are used in a generic sense and not as a reference to a particular risk matrix level. How this practice statement applies across specific risk matrix levels is explained in the Guide to managing high risk technical issues . A technical issue consists of a question or series of questions of an interpretive nature.

Legislative references:
ITAA 1936 Part IVA
ITAA 1936 45B

Related Practice Statements:
PS LA 2011/27

Other references

Risk management framework (internal link only)

How to engage Tax Counsel Network (TCN) - technical engagement process (internal link only)

Guide to managing high risk technical issues (internal link only)


ATO references:
File  1-3PWASXG / 1-4VOFOAP

PS LA 2012/1 history   Top  
   Date   Version 
   10 April 2012   Original statement   
   31 August 2012   Updated statement   
   11 October 2013   Updated statement   
 You are here ®  15 July 2016   Updated statement   
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