Fiona Boyce, Special Counsel, Tax and Legal Services, examines the ATO's updated guidance on the application of the general anti-avoidance rules.
After much anticipation, the Australian Taxation Office (ATO) has released a revised practice statement on the application of the general anti-avoidance rules (Law Administration Practice Statement (PSLA) 2005/24).
The updated PSLA provides additional guidance in relation to the amendments to Part IVA introduced in 2013.
Whilst the updated PSLA refers to the application of s177DA, being schemes that limit a taxable presence in Australia, introduced as part of the multinational anti-avoidance law reforms (MAAL), it does not provide guidance on its application.
As would be expected, the updated PSLA now incorporates the many influential court decisions handed down since 2005, including (amongst others) Federal Commissioner of Taxation v RCI Pty Ltd (2011)  FCAFC 105, Federal Commissioner of Taxation v Futuris Corporation Ltd (2012) 205 FCR 274 and Orica Limited v Commissioner of Taxation  FCA 1399.
However at paragraph 83 it is stated that “extreme caution” must be taken when having regard to case law, given that “new section 177CB so significantly alters the conceptual framework of the tax benefit test that cases such as..RCI..and..Futuris..can no longer be regarded as representing the law, so far as the tax benefit concept is concerned..”.
We note that practice statements are, essentially, corporate policy guidance for ATO officers on how to apply the law. They are not rulings, and also do not bind the ATO.
Taxpayers who rely upon the guidance in the revised practice statement in good faith can, however, obtain protection from penalties and interest (see PSLA 1998/1).
The ATO concedes at paragraph 79 of the updated PSLA that it has “very little practical experience so far in applying the  amendments in real cases”.
Essentially, only time will tell how the courts interpret the new law.