Anti-avoidance Miscellaneous 2013

The importance of being earnest ... when recording oral advice

Source: Taxation In Australia Journal Article

Published Date: 1 Sep 2013


“Aussie” John Symond wanted “tax-free” funding to construct his $57m Point Piper mansion. He sued his solicitors for negligently failing to advise him of the risk of a restructure of the Aussie Home Loans group resulting in the funding arrangements no longer being “tax-free”. Aussie John settled with the ATO after paying $6m in additional tax, penalties and interest. The solicitors’ written advice did not refer to the risk of the relevant anti-avoidance provisions making the funding taxable. They asserted, however, that this advice was given orally in conference on several occasions. The absence of contemporaneous file notes and correspondence referring to this oral advice undermined that defence.

This case illustrates the difficulties in defending a “failure to advise” claim in the absence of documentary evidence, and reminds practitioners that taking contemporaneous file notes and confirming oral advice in writing serves the dual purpose of assisting with the conduct of the matter and reducing the risk of exposure to such a claim.

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Anti-avoidance Miscellaneous 2013

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