ATO Bans Instalment Warrants Over Tax Concerns
The Australian Taxation Office (ATO), in conjunction with the Australian Prudential
Regulation Authority (APRA) on Monday banned superannuation funds from making
shareholder applications for instalment warrants. Instalment warrants, according to the Australian Financial Review, enabled
the super funds to buy shares by instalment and then convert those shares into
cash. This process was found to breach rules prohibiting fund trustees from
borrowing money, as under the scheme, investors were able to swap shares for
instalment warrants and recive up to 80% of the value as cash for other investments. According to the ATO, this also often acted as a mechanism for tax evasion,
as it allowed investors to avoid capital gains taxes which would otherwise have
applied to straight share sales. .
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