ATO eyes dividend access share arrangements
The Australian Taxation Office (ATO) has warned taxpayers against individuals promoting dividend access share arrangements.
As part of the scheme, a private company issues a new class of shares to associates of the private company's ordinary shareholders for nominal consideration.
According to the ATO, the new shares carry no voting rights and only carry the opportunity to receive a dividend.
The accumulated profits of the private company are then distributed to the new entity, and they pay less tax than would have been the case if the dividends were paid to the original shareholders of the private company, the ATO stated.
"While some arrangements may be claimed to be done for commercial and other non-tax purposes, we will be closely examining whether the way these arrangements have been set up would show a tax avoidance purpose," said Tax Commissioner Michael D'Ascenzo.
General anti-avoidance provisions may apply to these arrangements, while individuals involved in the facilitation of such schemes may risk breaching promoter penalty laws, the ATO stated.
The ATO has urged taxpayers to seek independent advice and notify the office of any individual or entity promoting such share arrangements.
Recommended for you
Half a year after Count Financial told its advisers to exit several Metrics Credit Partners funds, research house Lonsec has now downgraded two of these products over governance concerns.
Having divested its financial advice business to Fortnum Private Wealth, Australian Unity has shared further details on how it is transforming the wealth arm of the business to focus on investment bonds.
With candidate retention a concern after a professional year, two large licensees have shared how they are structuring their programs to successfully ensure candidates are keen to remain beyond the year.
Evidentia Private has appointed PIMCO’s Haydn Scott as principal for private wealth solutions, focusing on asset consulting and private markets.
