Macquarie prepares linked bond test case
MacquarieBank is preparing to take on the Australian Taxation Office (ATO) in court in a bid to reverse the tax office’s decision to disallow tax deductions from so-called equity linked bond products.
Macquarie, which has previously offered to help fund a case against the ATO put up by investors in linked bond products, is now in the final stages of banding together a group of investors and financial advisers who want to challenge the ATO’s position on the issue.
The ATO announced in 1999 that it would disallow tax deductions from offerings with linked bond features, forcing groups like Macquarie to stop offering the products.
The bond products were set up to allow for a bonus return linked to the movement of a share price or exchange rate, but were seen by the ATO as having been designed specifically to generate a tax deduction.
The ATO has now issued an amended assessment settlement offer to investors who had received deductions as a result of linked bond products before the tax office’s announcement in 1999.
“We are discussing litigation options with some people who have indicated that they do not want to accept the tax office’s settlement offer,” Macquarie executive director Leslie Petro says.
A spokesperson for the ATO says it does not generally provide test case funding for tax avoidance cases. But he says the ATO would welcome a case, funded by an outside group, to provide judicial certainty on equity linked bonds.
Macquarie is expected to make a final decision on whether to proceed with the test case within a month.
Recommended for you
ASIC has launched court proceeding 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.
