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17 Mar 088 Taxpayer Alert TA 2008/2 - Use of Liechtenstein legal structures

On 13 March 2008, the ATO issued Taxpayer Alert TA 2008/12 entitled "Use of certain legal structures established in Liechtenstein to attempt to avoid or evade Australian tax obligations".

The Taxpayer Alert describes an arrangement under which an Australian resident uses legal structures established under the laws of Liechtenstein to attempt to avoid or evade Australian tax obligations. The structure involved will typically include an Establishment (Anstalt), a Foundation (Stiftung), and/or other legal structures, such as Liechtenstein corporations.  The taxpayer directly or indirectly transfers assets to the structure, although such transfers may be revocable by the taxpayer. The assets may include cash and investments in term deposits, bonds or equities, which may themselves consist of undisclosed income or gains, and the actual transfer of the assets may give rise to undisclosed income or gains. The structure then uses the assets to generate passive income, which is retained by the structure. The taxpayer and/or their associates ultimately reap the economic benefits from the structure, often in a disguised form.

The ATO is examining these arrangements. This is being done in conjunction with revenue agencies in Canada, France, Italy, New Zealand, Sweden, United Kingdom, the United States of America and other countries.

In a media release issued on 13 March 2008, the Commissioner, Michael D’Ascenzo, commented on the Taxpayer Alert and reminded taxpayers about the advantages of making an offshore voluntary disclosure prior to audit.

For a copy of TA 2008/2, go here

For a copy of the ATO media release, No 2008/10, 13 March 2008, go here

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