The Restructuring of Assets

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Due to the widespread abolition of death duties throughout Australia many people fail to engage in proper estate or succession planning.  Many financial and accounting advisers still refer to restructuring of assets in an estate planning environment.  Unfortunately this may have some unintended tax consequences because where a restructuring of assets takes place there exists the very real possibility that it will infringe the anti-avoidance provisions of the Income Tax Assessment Act 1936. 

For the most part the community believes that income tax is solely restricted to a tax on income and although for the most part this is correct it also picks up capital gains, for example, capital profits.  The purpose of the general anti-avoidance provisions is to protect the integrity of the income tax system by ensuring that arrangements that have been contrived to obtain tax benefits will fail.  As the former Commissioner of Taxation, Michael Carmody said it  "is applied in a practical way.  It focuses on the substance of what has been done."  The Tax Office looks at the particular arrangement and has four years within which it can amend a taxpayer's assessment and where these provisions apply a taxpayer will not only be up for the increase in tax but also for penalties and interest.  Interest is referred to as the GIC (general interest charge) which is currently accruing at the rate of 13.12% having been recently increased. 

Suffice to say there are a number of matters which need to be considered and whether it would be objectively concluded that you or any other person entered into a scheme or carried out a scheme or any part of it for the sole or dominant purpose of obtaining a tax benefit?  This is an area pregnant with risk and where anyone considering restructuring their assets call LAC Lawyers for informed legal advice.  Proper succession planning will avoid the problems associated with a restructuring of assets.

 

Contact us now for Fast, Accurate and Timely legal advice

Phone LAC Lawyers on NSW 1300 799 888 or VIC 1300 734 638 or send us an email