Tax Commissioner Michael D’Ascenzo today warned the ATO will take a close look at uncommercial arrangements designed to claim unintended GST benefits for a company’s float, merger or acquisition.
Under these arrangements, a company involved in a takeover uses a related associate to procure all the services required for that takeover – for example legal and accounting advice.
The associate then bundles those services and invoices the company for the one supply. The company then claims reduced input tax credits that they wouldn’t normally be entitled to if they had acquired these services directly from the service provider.
“We are seeing more of these types of arrangements and several are currently under review,” Mr D’Ascenzo said.
“People considering these arrangements should be aware we will take a close look at the tax affairs of anyone taking part.
“Those unsure about their situation should seek independent advice or contact us for a private ruling on their individual circumstances.”
People who contact the ATO before they are advised of an audit will be entitled to a reduction in any penalties that may apply.
More information
Taxpayer alert 2010/1 provides more information on these arrangements and is available from www.ato.gov.au/atp.
TAXPAYER ALERT
Taxpayer alerts are intended as an ‘early warning’ to taxpayers and their advisers of significant tax planning issues or arrangements that the Tax Office has under risk assessment or about which it has concerns.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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