AMIA calls for Carmody resignation
The Australian Managed Investment Association (AMIA) has called for Australian Tax Office (ATO) commissioner Michael Carmody’s resignation in light of growing anger over revised rulings on tax-effective schemes.
The call was made by AMIA chairman George Gear at the Senate Economics References Committee hearing in Perth late last month.
"We believe the only way investor confidence can be restored and rural investment can return is to dismiss Carmody as commissioner, together with the senior tax officers responsible for this campaign," Gear says.
"The ATO is out of control and if the tax-effective industry isn't successful with its test cases against them, who knows what the ATO will target next."
The dispute with the ATO centres on tax-effective schemes, usually involving agricultural investments dating back to the early nineties. The ATO allowed these schemes to flourish initially, but in the past two years has been issuing amendment assessment to investors, asking them to pay back the deductions.
Some of the schemes are challenging the ATO revised rulings and the hearings are proceeding.
Gear claims that many of the investors receiving revised assessments are blue-collar one-income families who were investing for their retirement.
"These investors have fulfilled their duty of care under the self-assessment regime," he says. "Before investing they were provided with a prospectus containing financial forecasts of profits, reports from technical and marketing experts as well as tax opinions from leading tax lawyers and accountants."
Gears argues the investors had sought enough opinions on the tax situation and that it was the ATO which created the problem.
"The ATO completely failed in its duty of care to inform the market of its concerns," he says.
"A reasonable person would conclude that the allowance of deductions since at least 1998was a real indication by the ATO that these investments complied with tax laws in line with the advice given in the prospectuses."
In his evidence to the Senate committee, Gear argued large corporate taxpayers were being allowed the deductions which smaller investors were being refused.
He cited a case between the food wholesaler Foodland and the ATO concerning a $53 million disallowance which is being appealed. Gear alleges the ATO is taking no action to recover the sum until all legal appeals are completed.
"We ask why haven't investors in tax-effective projects been given the same treatment?" he says.
"Once again this is a situation where one set of rules applies for the big end of town and one for the little end."
This has lead to investors losing confidence in managed investment schemes, Gear says, due to the ATO's change of mind about rulings.
"Investor confidence has gone because this is the most dishonest and disruptive campaign the ATO has ever embarked on in its history."
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
