It appears that merely applying for a private ruling
provides a form of penalty protection for a transaction, whether
that is a complete or partial removal of any administrative
penalty.
Taxpayers have a bit more clarity about the effect of seeking a
private ruling, even if the ATO refuses to make the ruling.
On its face, Hacon v Commissioner of Taxation [2017] FCA 659 was
about whether the Commissioner could be compelled to give a ruling
where he refused to rule on the basis of insufficient
information.
Intriguingly though, Justice Logan hinted, albeit in a somewhat
Delphic manner, that the mere fact that the applicants had sought a
private ruling (even though it had been refused on grounds open to
the Commissioner) would provide the taxpayer with a degree of
protection from any administrative penalty if a tax assessment
eventually arose in respect of the facts disclosed in the
ruling.
