Product ruling rush for ATO
The Australian Tax Office (ATO) says it may not be able to process all of the 110 applications it has so far received for product rulings before June, 30, 1999, despite having put more people on the job.
Even though the product ruling system was announced in June 1998, more than a third of the applications have been received over the last month.
Assistant Tax Commissioner Peter Smith says about 18 rulings have been issued so far.
"We have found that in most of the cases we have had to go back and get more information from the applicant," he says.
In the meantime, his office says potential investors should ensure they are dealing with scrupulous operators when choosing any tax efficient product, and that they are fully informed of the risks of any investment decision.
Smith says decisions should focus on the product and how it fits into a portfolio. Tax consequences should be secondary and the management fees on tax efficient products should be closely scrutinised.
The ATO says a favourable product ruling does not mean it has sanctioned all aspects of a particular arrangement.
"An investor can rely on a product ruling to determine whether or not a tax deduction from an investment is available under the law," the ATO says.
"However, it is also important to understand that the product ruling only applies if the promoter implements the arrangement in the manner specified in the product
ruling. Investors may like to gain some assurance from the promoter to this affect."
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