Investors urged to reject tax scheme offer
The Australian Managed Investments Association (AMIA) is calling on investors caught up in the controversy over mass marketed tax schemes to consider rejecting theAustralian Tax Office’s (ATO)offer to settle the long running dispute.
AMIA chairman George Gear, a former assistant treasurer with the Keating Government, has warned mass marketed tax scheme investors that accepting the ATO’s offer is akin to an admission of guilt and would label investors as tax cheats.
Under the ATO’s settlement offer, announced last week, scheme investors, who received a total of $4.5 billion in tax deductions over a 10 year period only to have the deductions retrospectively disallowed by the ATO, will not be charged penalties or interest on the tax debts they now owe the ATO.
Investors in the schemes will also be allowed to claim deductions for the actual cash payments they paid into the tax schemes and will have a two year interest free period to repay outstanding debts to the tax office.
The tax commissioner, Michael Carmody, announced the ATO’s settlement offer after the release by the Senate Economics References Committee of its report into mass marketed tax effective schemes.
The report, the second and last by the committee into the schemes, has recommended tough new measures to police the promoters of mass marketed schemes, including giving the ATO the power to apply to the courts for an injunction to stop the promotion of schemes which it considers to be tax abusive.
But AMIA has rejected the Senate committee’s recommendations, choosing instead to back the findings of a separate minority report prepared by the committee’s only independent senator, Shayne Murphy.
The minority report, which labels the ATO as incompetent, is scathing of the ATO’s handling of the mass marketed tax schemes issue, particularly its delay in ruling against the tax schemes, many of which had been under investigation for a number of years.
“This maladministration by the ATO has caused substantial social distress including suicides, marital breakdowns, bankruptcies and work related stress incidents. Sadly the settlement offer by the ATO does nothing to end this situation but will ensure that it continues,” Gear says.
Gear, who has called on the Prime Minister to personally intervene on behalf of taxpayers caught up in the schemes, is also highly critical of theFinancial Planning Association’s (FPA)response to the tax schemes issue.
“The FPA’s silence on this issue, given its relevance to financial advisers, is deafening,” Gear says.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
