ATO alert courtesy of the Australian Taxation Office;

 

Part IVA applies to complex scheme moving profits through trusts

 

In two related decisions, the ATO has successfully applied Pt IVA to a complex scheme whereby the profits of the law firm (CHPT) and related consultancy businesses were moved through various trusts (IET) to a company that had losses and then to other entities.

 

In the first case (Grant) the AAT concluded that Pt IVA of the ITAA 1936 applied in relation to both the CHPT and IET income. The AAT also decided that prior year losses were available to Mr Grant, thereby reducing the amount of the tax benefits obtained by him.

 

The second case (Collie) only concerned the application of Pt IVA in relation to IET income connected with the consulting trusts. For similar reasons as in the Grant case, the AAT concluded that Pt IVA did apply (Grant and FCT [2024] AATA 427; Collie and FCT [2024] AATA 440, AAT, O’Loughlin DP, 12 March 2024.)

 

For more information, visit the ATO’s legal database or contact our office at 9721 1055.

 

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