CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. ATO Warns Against Misuse Of Partnership Rules

ATO Warns Against Misuse Of Partnership Rules

by Mary Swire, Tax-News.com, Hong Kong

12 November 2015


The Australian Taxation Office (ATO) has said that it is reviewing arrangements where partnerships with private company partners are used to avoid tax.

The ATO said that the arrangements involve a purported partnership with a private company partner that is used to enable individuals to access business profits without paying top-up income tax at their marginal rates of tax.

The ATO explained that the profits are usually channelled to the partnership via a discretionary trust or through dividends from a private company, such as under a "dividend access share" arrangement. The partnership may also derive income from carrying on a business.

Deputy Commissioner Michael Cranston said: "We're seeing contrived arrangements where business profits are claimed to be diverted to a partnership and as much as 99 percent of profits are allocated to the private company and taxed at the 30 percent [corporate] tax rate. The company typically doesn't control or benefit from the profits. Rather, the money is loaned or paid to individuals who do not include the amounts in their assessable income avoiding 'top-up' income tax on what they receive."

"We're finalizing our view and consider that the arrangement may be ineffective at law. We encourage taxpayers who think they may be involved in such arrangements to contact us to make a voluntary disclosure or seek a private ruling," he added.

TAGS: individuals | compliance | tax | business | tax compliance | tax avoidance | law | Australia | dividends

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »