Taxpayer Alert: Purported alienation of income through discretionary trust partners - TA 2013/3
25 Nov 2013
On 22 November 2013, the ATO issued Taxpayer Alert TA 2013/3 entitled "Purported alienation of income through discretionary trust partners"
The Taxpayer Alert 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 (firm); but fails to give legal effect to that structure or fails to account for its tax consequences. Full details are set out in the Taxpayer Alert.
The ATO is currently reviewing these arrangements and conducting examinations in appropriate cases.
The ATO is preparing further guidance on these arrangements in the form of an online publication to help professionals understand the risks and how to address them in practice.
The ATO is also consulting with relevant professional bodies on the action it is taking, including the potential application of Part IVA of the ITAA 1936.
The ATO will examine arrangements which the ATO considers are a sham or ineffective in alienating the individual's income, or where CGT has not been correctly recognised.
The ATO will apply compliance resources to consider the possible application of Part IVA of the ITAA 1936 to arrangements of the type covered by this alert in relation to tax benefits arising in the 2013/14 income year and later income years.
For a copy of ATO media release No 2013/39, issued 22 November 2013, relating to the issue of the Taxpayer Alert, go here