Question 3 Robert G entered into a business arrangement on 17 August 2017.

Question 3

Robert G entered into a business arrangement on 17 August 2017. Being unsure about the tax treatment relating to the deductibility of certain expenses likely to be incurred under the arrangement he lodged an application in the approved form to the Commissioner, requesting a private ruling about the impact of the tax laws to the said arrangement. The ruling characterises the expenditure in question as being of a capital nature and therefore not deductible.

Upon discussing the Commissioner's ruling on his transaction with a cousin of his who is studying law at Macquarie University, Robert G is now convinced that the ruling does not reflect the true impact of the law on his arrangement.

He seeks your advice on the following matters:

1. (a) whether he is bound to follow the ruling and not, therefore, claim the deduction,
2. (b) the possible consequences if he goes ahead and claims the deduction, and
3. (c) whether he can challenge the ruling to hopefully produce a better outcome for

himself