FPA drops tax action
The FinancialPlanning Association (FPA) has suffered a set back in its attempt to take on the Australian Taxation Office (ATO) over its decision to exclude financial planners from the settlement offer on mass marketed tax schemes.
The FPA sought legal opinion to determine whether it had recourse against the ATO after it rejected the FPA’s application that advisers should automatically qualify for the settlement offer.
But the FPA’s legal consultants, Gadens Lawyers, have advised the association that the time and cost of pursuing legal action would be unwarranted given the limited likelihood of success.
Gadens says an administrative review of the ATO’s decision was unlikely to meet with any success and further action, such as a writ preventing the Tax Commissioner from acting, could force those liable under the schemes to pay.
Gadens also downplayed the chance of a test case on the matter, stating the timeframes were outside the settlement dates. Furthermore, costs for a test case were estimated to be between $30,000 to $50,000, without a guarantee that the ATO would fund such a case.
The FPA’s decision to examine the possibility of legal action came after the ATO wrote to the association rebuffing its arguments that planners should have the same access to the settlement scheme as other investors.
Under the settlement offer, investors are required to hand back the tax deductions they received from investing in tax effective schemes in exchange for being excused from having to pay penalties and interest on those deductions.
However, financial planners who invested their own money into the schemes have been excluded from the settlement.
The ATO has indicated that it will hear financial planners’ requests to be included in the settlement offer on a case-by-case basis. However, it is understood the ATO will exclude from the offer all planners who invested in the schemes themselves, but also profited from recommending the tax schemes to their clients.
FPA chief executive Ken Breakspear says the association is unlikely to continue to explore the possibility of legal action.
However, he says financial planners who had not been charged with any wrongdoing over the tax schemes should be treated fairly by the ATO.
AUTHOR
George Liondis
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