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06 Feb 14 Dividend access arrangements

MEMBER 3 writes:

"We have received a letter from ATO dated 11 November 2013 addressed to us as the tax agent advising that:

'We have identified that a number of your firm’s client’s may be involved in an arrangement where accumulated profits are distributed in a substantially tax free form. We are concerned that these arrangement are carefully planned so that profits are distributed in order to reduce the taxable income of the ordinary shareholder and/or their associates.

What happens next: If your client has not lodged their 2012 and any/or prior year income tax return, we will write to you requesting lodgment of any of their outstanding returns. We will also continue to monitor your client’s activities to ensure they comply with the tax laws.'

We ring the phone number provided by ATO that is an answering machine which says we have contacted the 'aggressive tax planning section'.

We leave our contact details ,however, to date [20 December 2013] no reply.

There is attached a list of ONE client that has been identified which we review to find all income tax returns including 2013 have been lodged, no dividend has been declared over the last 10 years, no change of shareholder, etc. and there is no Div 7A issues.

We await developments!

Thank you TTI for allowing the majority of your small tax agents members the opportunity to disclose their experience with ATO bureaucracy."