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The Australian Taxation Office provides oral advice on interpretative matters to persons seeking advice about the application of the laws administered by the Commissioner. The Tax Office provides this oral advice by phone or in person. This practice statement refers to such advice as oral technical advice. Oral technical advice is to be contrasted with the non-technical (operational) advice provided to clients, for example, account details. The focus of this practice statement is on non-binding oral technical advice as opposed to the binding oral technical advice which can be expressly requested by taxpayers on certain matters under the Binding Oral Advice system (Division 360 of Schedule 1 to the Taxation Administration Act 1953 ).

Oral technical advice is an important type of advice provided by the Tax Office to assist taxpayers in a self-assessment system. This is because there are many situations which arise in the ordinary course of conducting the Tax Office's business where advice is orally requested and it is appropriate to respond orally. This practice statement sets out rules and provides guidelines on when it is appropriate to provide oral technical advice. These rules and guidelines are not prescribing a pulling back or withdrawal from staff undertaking discussions that necessarily arise in the normal course of dealing with Tax Office clients. Rather, they seek to assist staff in ascertaining when a person requesting oral advice should be advised to seek the advice in writing. This will ensure that any advice provided will be useful, consistent and accurate.

Attachment A contains a decision tree capturing the major rules contained in this practice statement. Attachment B contains practical guidance on how the rules contained in this practice statement apply to the Tax Office's various work types.

Oral technical advice is to be provided only on matters of a general, straightforward or simple nature. Before an officer gives any oral technical advice, they must take all reasonable steps to ensure that all relevant information has been obtained from the person who is requesting the advice.

The Tax Office is required to take care in providing oral technical advice. Every effort must be made to ensure that our oral technical advice is accurate, complete and understood by the person requesting the advice. Any such advice, therefore, must be consistent with the ATO view and be provided by an appropriate technical officer. [F1]

If a person follows advice provided by the Tax Office which turns out to be incorrect and, in doing so, makes an honest mistake, they will not be subject to a penalty or interest, although they will be required to pay any underpaid tax.

Where a matter is not of a general, straightforward or simple nature, the person is to be advised to request the advice in writing (see Law Administration Practice Statement PS LA 2001/4 to ascertain the type of written technical advice that should be requested and the information that should be provided with the request).

Subject to the limited exception described in paragraph 18 below, officers should not provide indicative oral technical advice.

Oral technical advice is to be provided only on matters of a general, straightforward or simple nature. The advice provided must be consistent with the ATO view in relation to that interpretative issue. Sources of the ATO view for the purposes of providing oral technical advice include formal documents such as public rulings and other documents that provide an indication of the ATO view, such as call centre scripts, ATO Interpretative Decisions and other interpretative products published by the Tax Office. [F2] If there is any apparent inconsistency in source documents, no advice should be given and the issue should be escalated for resolution following appropriate escalation procedures.

It would be appropriate to provide advice about an unambiguous and clearly simple area of the law, even if its operation is only implicitly stated or briefly outlined in one of the above-mentioned documents. This is to be contrasted with the situation where there is ambiguity in the law and an ATO view is not clearly contained in one of the above-mentioned documents.

A matter is of a general nature if the person has asked about the general principles of the operation of the law (for example, how does section 8-1 of the ITAA 1997 generally operate in respect of self-education expenses). In these cases, the decision remains with the person how those principles apply to his or her circumstances. [F3]

If, however, a person wants oral advice about the application of the law to their particular circumstances, the matter must be of a straightforward or simple nature (that is, not complex) before they will receive oral technical advice. [F4] In most cases, this requirement will be presumed to be satisfied by the existence of a call centre script which can be clearly applied to the case. In other cases, this requirement will be presumed not to be satisfied where, at the relevant time, there is no ATO view for the purposes of providing oral technical advice.

The judgment whether a matter is general, straightforward or simple, and whether a relevant ATO view applies, may depend on the expertise and experience of the person providing the advice. In this regard, the ATO has procedures in place for escalating matters to technical experts. For example, call centre staff can seek the assistance of a mentor and, in appropriate cases, forward phone calls to technical experts such as Centres of Expertise (CoE) staff, who will consider whether oral technical advice can be provided.

Where a person seeks advice on a matter that is not of a general, straightforward or simple nature, the person is to be advised to request the advice in writing. This ensures that the person receives a properly considered opinion on the application of the law to their circumstances. It also means that the person obtains advice that is binding on the Commissioner (see PS LA 2001/4 on the provision of written technical advice).

Subject to the limited exception described in paragraph 18 below, officers are not to provide indicative oral technical advice - that is, advice based upon the possible or likely ATO view of the law in relation to an arrangement. For example, Tax Office staff must not provide a client who has been advised to request the advice in writing with what the officer anticipates will be the answer. As another example, a case officer is not to provide a client with the likely answer to a request for written advice before the case has been finalised. This prohibition on indicative oral advice is to ensure that no technical advice is provided unless the actual details of the proposed arrangement and its purpose have been firmly established and we have finalised our view about the tax consequences of the arrangement.

Providing indicative oral technical advice may create expectations that we will adopt a particular view in relation to a particular arrangement that may not subsequently be met. This has the potential to undermine confidence in the Tax Office's administration of the tax system.

This does not mean that officers cannot undertake discussions with a taxpayer about a particular arrangement, either prior to or following the receipt of a written request for advice. Indeed, such discussions may reveal the need for a written request for advice, and shed light on the information and material that should be provided with the request. For instance, general discussions around ambiguity in the law or its application are often a necessary part of ensuring that the right facts and matters are provided and considered in a private ruling. Such discussions may also highlight to taxpayers those areas where we have concerns. What is important is that staff do not go further and indicate a possible or likely ATO view of the law in relation to a specific arrangement. In some cases it might be necessary to explain this to the client.

It may be appropriate in exceptional cases, where we have not finalised our position on the interpretative issues, to provide indicative oral technical advice. However, the provision of indicative oral advice should occur only where there is: • a substantial and time-dependent business need • a very low risk of a different view being taken • appropriate documentation and transparency, and • involvement of appropriate Tax Office staff.

The provision of indicative oral technical advice which is positive (favourable) to the person is also subject to approval at the following SES levels: CoE manager or Senior Tax Counsel where there is no precedent; and Business Line SES where there is a precedent. Furthermore, the provision of such advice is subject to the clear notification and acknowledgment that the preliminary position is not binding and is subject to further consideration.

Where indicative oral technical advice is provided in connection with a request for written advice, a record of the indicative advice must be attached to the TDMS case record.