ATO warns on contrived trust arrangement
The Australian Taxation Office (ATO) has issued a warning on contrived trust arrangements that seek to improperly gain favourable tax breaks, or sometimes no tax at all.
According to the ATO, in some cases the trust arrangements were aiming to create artificial differences between the taxable net income and distributable income of closely held trusts.
The ATO, which is using the ongoing monitoring and reviews by the Trusts Taskforce to identify these arrangements, said that 10 of the cases it was currently examining showed lost revenue of more than $40 million.
Deputy commissioner, Michael Cranston, said: "Unfortunately we have seen some trustees enter into arrangements that create contrived differences between the trust net income and distributable income".
"These trustees exploit the differences to have the net income assessed to individuals and businesses that pay little or no tax, and allow others enjoy the economic benefits of the net income free-of-tax."
The Trusts Taskforce was set up in 2013 with an objective to undertake targeted compliance action against people involved in tax avoidance or evasion using trusts.
Since then, ATO has raised $772 million in liabilities and collected $164.5 million as well as restrained assets of $55 million under proceeds of crime legislation.
AUTHOR
Oksana Patron
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