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The increasing use and threat of section 100A
Published on 01 Oct 20 by "THE TAX SPECIALIST" JOURNAL ARTICLE
Section 100A of the Income Tax Assessment Act 1936 (Cth) was enacted in 1978 to deal with a specific form of tax avoidance referred to as “trust stripping”. Subsequent judicial comments have suggested, however, that the provisions potentially have broader reach. Nevertheless, s 100A does not apply to “ordinary family or commercial dealings” and the ATO has indicated it is preparing a draft taxation ruling that will set out the Commissioner’s preliminary views on that expression. This article suggests that, given the way in which family business and investment structures have developed over the last 40 years, a significant number of dealings — that regularly take place in 2020 between family members in relation to private companies and trusts — should be treated as “ordinary family dealings” for s 100A purposes. Section 100A should be used to prevent tax avoidance and not legitimate tax planning in a family context.
