25 Feb 2013

Tax avoidance rules enter new territory

Dr Niv Tadmore from our Taxation group talks to BRRMedia about the Part IVA changes.

Tax avoidance rules enter new territory
David Bushby, BRR Media
Dr Niv Tadmore Partner, Clayton Utz

David Bushby

Today we're speaking with Dr Niv Tadmore. He's a Partner in the National Tax Team here at Clayton Utz. Niv, thanks for joining us.

Dr Niv Tadmore

Thank you.

David Bushby

Niv, the Government expects to reap some $1 billion in extra tax revenue by introducing new laws to help prevent tax avoidance.

Dr Niv Tadmore

The ATO has lost a number of Part IVA cases in recent years, and those were cases that the ATO strongly believed it should have won. The Government has identified a weakness in the structure of Part IVA and has decided to rectify that weakness. Essentially the weakness is about cutting through or short circuiting a lot of inquiries that a taxpayer was entitled to make in those cases.

David Bushby

And what types of businesses or structures are being targeted here?

Dr Niv Tadmore

The policy intent was to rectify a specific problem, but I think that the new provisions will go beyond that. I think that we're going to step into new territories as far as Part IVA is concerned. The first wave if you like I think would hit reorganisations of public companies, private equity investment into Australia, a restructure of family businesses and cases where the tax benefit is based on a deduction. With the second wave we'll have to wait and see how the ATO is going to deliver those provisions and how the courts are going to interpret the new law.

David Bushby

And just finally when do these provisions take effect?

Dr Niv Tadmore

Once the Bill becomes law it will be retrospective from 16 November 2012, which means that people today would have to rethink and reconsider their approach to tax risk and Part IVA.

David Bushby

Niv, thanks so much for your time.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.