Regrettably, this time of year can be the investor's equivalent of the silly season and this year the Tax Office is not helping.
In 1998 the Tax Office introduced product rulings to give investors greater security about the tax deductibility claims made by promoters of tax-effective schemes.
As a result, schemes that were shams have largely disappeared because, unless a product had a Tax Office product ruling, it wasn't worth looking at.
Now the product ruling system is under a cloud thanks to the decision to change the tax deductibility of capital-protected equity loans.
Earlier this year the High Court refused the Tax Office the right to appeal in a case where the taxpayer claimed a 100 per cent deduction for both the interest bill and the cost of loan protection.
The ATO and Treasury then announced a law change to stop the combined interest payment and option cost being deductible up front.
But since the announcement that the deductions would be disallowed from April 16, there has been stony silence about how the new rules will work.
What level of deductibility is allowable? How will it be calculated? What interest rate can you use?
Some products already in the market for example, Macquarie's Geared Equities Investment have a Tax Office product ruling issued last year, and valid for three years, that allows for 85 per cent deductibility.
But it is unclear whether investors can rely on it if they invest in the product again this year.
The issue is whether the Tax Office will rescind that ruling or allow it to continue until 2005 because it was granted before the proposed law changes.
One of the great values of the product-ruling system is the certainty it gives investors.
But with the capital protected loan products it seems that level of comfort is being seriously eroded.
There is no indication when investors will get some clarity or direction.
It seems unreasonable to allow this uncertainty to continue as June 30 approaches.
Robin Bowerman is managing editor of Personal Investor, Shares and Asset magazines.
