A landmark decision challenging the Australian Taxation Office’s rulings on trusts could trigger appeals by taxpayers who have had their assessments amended to increase their tax during the past 14 years.
Molesworth believes the AAT decision will support an argument that taxpayers’ claims were reasonable.The AAT ruling potentially questions the past 14 years of tax treatment of about 971,000 family trusts, most of which have corporate beneficiaries, and loans totalling around $100 billion. “This will be a precedent setter if upheld on appeal,” Hall & Wilcox tax partner Michael Parker says. “It will cause people to revisit the way they use family trusts and company structures for funding investments and business operations.”Tax authorities do not have to follow the Bendel ruling as the decision was made by a tribunal, despite pressure from tax professionals to establish its legal position on the issues.“I would be surprised if they did not appeal,” Spencer says.
On September 28, AAT deputy president Frank O’Loughlin and senior member Keith James ruled it was not a 7A loan, adding that the ATO had misinterpreted the tax law set out in statute by the federal government.”The balance of an outstanding or unpaid entitlement of a corporate beneficiary of a trust, whether held on a separate trust or otherwise, is not a loan to the trustee of that trust,” the decision says.
Before 2009, this meant that trusts paid the lower company tax rate on income and had access to the 50 per cent capital gains tax on future capital gains.
Health Health Latest News, Health Health Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: 7NewsAustralia - 🏆 11. / 71 Read more »