Macquarie prepares linked bond test case
MacquarieBank is preparing to take on the Australian Taxation Office (ATO) in court in a bid to reverse the tax office’s decision to disallow tax deductions from so-called equity linked bond products.
Macquarie, which has previously offered to help fund a case against the ATO put up by investors in linked bond products, is now in the final stages of banding together a group of investors and financial advisers who want to challenge the ATO’s position on the issue.
The ATO announced in 1999 that it would disallow tax deductions from offerings with linked bond features, forcing groups like Macquarie to stop offering the products.
The bond products were set up to allow for a bonus return linked to the movement of a share price or exchange rate, but were seen by the ATO as having been designed specifically to generate a tax deduction.
The ATO has now issued an amended assessment settlement offer to investors who had received deductions as a result of linked bond products before the tax office’s announcement in 1999.
“We are discussing litigation options with some people who have indicated that they do not want to accept the tax office’s settlement offer,” Macquarie executive director Leslie Petro says.
A spokesperson for the ATO says it does not generally provide test case funding for tax avoidance cases. But he says the ATO would welcome a case, funded by an outside group, to provide judicial certainty on equity linked bonds.
Macquarie is expected to make a final decision on whether to proceed with the test case within a month.
AUTHOR
George Liondis
Recommended for you
As the government announces a public inquiry into the collapse of Dixon Advisory, risk adviser Richard Silberman has detailed the three areas that typically lead to an AFSL's collapse.
With a growing number of advisers now running their own business, they need to pivot their career identity to being a business owner rather than just as a financial adviser if they want to futureproof their business.
Zenith Investment Partners has launched a range of new managed account portfolios over the past quarter, including on Insignia Financial’s Expand platform.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
