The ATO has announced that it is reviewing arrangements involving accountants, lawyers and other professionals operating through partnerships of discretionary trusts.
It has issued Taxpayer Alert 2013/3 that describes arrangements where an individual purports to make the trustee of a discretionary trust a partner in a firm of accountants, lawyers or other professionals, but fails to give legal effect to that structure or fails to account for its tax consequences.
Second Commissioner Bruce Quigley said that the ATO is looking at these arrangements to consider whether the transactions are effective at law. “Professional practices may legitimately operate as a partnership of discretionary trusts, but in some cases we’re seeing people misuse these structures to avoid their tax obligations” said Mr Quigley. The ATO said it is currently reviewing these arrangements and conducting examinations in appropriate cases.
The ATO is also developing further guidance on these arrangements and reviewing relevant Taxation Rulings and Determinations. The ATO says it will apply compliance resources to consider the possible application of the anti-avoidance rules to arrangements of the type covered by the alert in relation to tax benefits arising in the 2013-14 income year and later income years.
Relevant professional bodies are being consulted on these matters.
Any taxpayers involved in similar arrangements may wish to review their taxation affairs and consider seeking independent advice, the Commissioner said. Where appropriate, taxpayers can contact the ATO to make a voluntary disclosure.
Source: ATO media release 2013/39, 22 November 2013
[LTN 228, 25/11/13]