Week 1 – 20 July 2020
Discussed tax research in general, focused on primary and secondary data sources
Unfamiliar-ish concept
What is a binding ruling?
A binding ruling is Inland Revenue’s interpretation of how a tax law applies to a particular arrangement, person or
item of property. This can be on any agreement, contract, plan or understanding (whether enforceable or not),
including any steps and transactions that carry it into effect or it can be whether a person or item of property meets
the requirements of tax law.
Why apply for a binding ruling?
Binding rulings can provide certainty on the tax position for a wide range of transactions, from complex financing
transactions to land subdivisions. Anyone can apply for a binding ruling on a transaction, but there are some
restrictions on our ability to provide a binding ruling.
What is the purpose of a binding ruling?
Binding rulings help taxpayers comply with the law and to meet their obligations under the law. They provide
certainty about how Inland Revenue will interpret how the law applies to a specific transaction, person or item of
property.
They are especially useful where:
– the law is unclear and there is more than one possible interpretation
– new legislation applies to the transaction
– the transaction is novel, sensitive or controversial
